In the case of Basic Incorporated v. Levinson, 1987, the U.S. Supreme Court established a precedent for securities fraud cases known as the "fraud-on-the-market" theory. The plaintiffs were shareholders in Basic Inc., who alleged that they had been misled by false statements from company officials denying merger talks with another corporation when such discussions were indeed taking place. They argued this misinformation led them to trade their shares at prices that did not reflect their true value and thus suffered financial loss when the truth was revealed and share prices fell drastically. The court ruled in favor of the plaintiffs, stating that public misrepresentations could affect stock market prices and investors relying on those integrity might suffer if it turns out to be misleading or fraudulent - even if they didn't directly rely on these specific statements while trading stocks but relied on market price's integrity instead. This ruling significantly lowered plaintiff’s burden of proof in class-action lawsuits involving securities fraud because it allowed courts to presume reliance based on publicly available information rather than requiring each individual investor to prove direct reliance.

In the dissenting opinion for BASIC INCORPORATED, et al. v. MAX L. LEVINSON et al., Justice White disagreed with the majority's decision to adopt a "fraud-on-the-market" theory in securities fraud cases under Rule 10b-5 of the Securities Exchange Act of 1934. He argued that this theory was not supported by congressional intent or precedent and could potentially lead to an increase in frivolous lawsuits due to its presumption that public statements affect stock prices even if individual investors do not rely on them directly. Additionally, he expressed concern about shifting the burden of proof from plaintiffs (who traditionally must prove reliance) onto defendants (who would now have to disprove it). This shift, according to him, contradicts traditional principles of tort law and may deter companies from making any public statements out of fear they might be sued for securities fraud.