Eugene Dupont III v. Edward J. Brady and Brady & Tarpey, P.C.

WINTER, Circuit Judge:

The principal issue before us, one of first impression, is which party bears the burden of persuasion on the issue of a plaintiff’s reliance or nonreliance on a defendant’s material omissions under Section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j(b) (1982), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.-10b-5 (1986). We conclude that, once the plaintiff establishes the materiality of the omission by a preponderance of the evidence, the burden shifts to the defendant to establish also by a preponderance of the evidence that the plaintiff…