Last week the Oregon Court of Appeals held that a plaintiff making a claim under the state's securities fraud statute must prove reliance as an element of the claim. In State of Oregon v. Marsh & McLennan Companies, Inc., the state filed suit to recover losses to the Public Employees Retirement Fund in connection with the drop in the value of stock in Marsh & McLennan. The state claimed that Marsh & McLennan issued statements about its business ethics and sources of income that proved to be false once certain executives pleaded guilty to various corporate misdeeds. Plaintiff sued under ORS 59.135 (prohibiting fraud and misrepresentation in security transactions) and ORS 59.137 (creating cause of action for violating ORS 59.135).
Defendant obtained summary judgment on the ground that the state could not provide evidence that the retirement fund's agents purchased the stock in reliance on Marsh & McLennan's fraudulent misrepresentations. The Court of Appeals affirmed, holding that, even though the statute does not expressly call out reliance as an element of the claim, use of the terms "fraud" and "defraud" in the statute necessarily implies reliance.