Securities Fraud Loss Calculator
Securities fraud damages under SEC Rule 10b-5 use the 'out-of-pocket' measure — the difference between price paid and true value at purchase, or alternatively rescissory damages restoring the transaction. Class actions, FINRA arbitration, and state blue-sky claims have different damage rules.
Damage Measures Under 10b-5
Three primary measures: out-of-pocket (purchase price minus true value), rescissory (return to pre-purchase position), and benefit-of-the-bargain (rarely allowed in 10b-5 cases). Most class actions use out-of-pocket as anchored by Dura Pharmaceuticals v Broudo (2005) requiring causation between misrepresentation and loss.
Loss Causation Requirement
Dura requires plaintiffs to plead and prove that the misrepresentation caused the economic loss. Stock price drop on corrective disclosure is the standard proof. Drops attributable to market-wide moves or unrelated company events are not recoverable.
Class Action Settlements Reality
Cornerstone Research's 2025 securities litigation report shows median settlements of 5-7% of provable damages. Top decile cases settle 25-50%. Stricter pleading standards (PSLRA) and tougher Dura causation mean about 50% of filed cases are dismissed before discovery.
Source: SEC Rule 10b-5; Dura Pharmaceuticals v Broudo (544 US 336); Cornerstone Research Securities Litigation Report 2025. Last updated: May 2026.