Benjamin Wish is quoted in Massachusetts Lawyers Weekly on a recent federal court decision interpreting Massachusetts law to allow “lost-expectation” damages for a common law fraud claim related to a stock purchase.
Judge Dennis F. Saylor IV (D. Mass.) determined that the plaintiff’s potential fraud damages could include lost profits on any additional shares he would have obtained but for the alleged misrepresentation by the defendant.
The plaintiff investor claims the company owner failed to disclose information that significantly diluted the number of shares the investor could purchase with his $1 million investment.
The judge rejected the defendant’s argument that the investor could only claim “lost-value” damages – essentially the difference between the purchase price of the shares the plaintiff received and their actual value reflected by the alleged fraudulent nondisclosure.
The judge’s ruling has implications broader than stock purchases, noted Mr. Wish.
“You could potentially have an issue [of lost-expectation damages] with almost any purchase of equity in a business — whether in the form of stock or otherwise,” Mr. Wish told Lawyers Weekly. “This is the very exceptional case where there’s a very straightforward way to measure exactly what those lost profits were.”