In the 2004 case Dura Pharmaceuticals, Inc. v. Broudo, the United States Supreme Court ruled that plaintiffs in a securities fraud lawsuit must prove they suffered an actual economic loss as a result of the alleged fraudulent activity to have standing to sue under federal law. The court held that it was not enough for shareholders simply to allege that they paid artificially inflated prices for their shares due to misleading statements or omissions by company officials; rather, they had also to demonstrate that this misconduct caused them tangible financial harm when stock values later declined. This decision clarified and tightened requirements for shareholder lawsuits alleging securities fraud, making it more difficult for such suits to proceed without clear evidence of causation and damages.

In the dissenting opinion for Dura Pharmaceuticals, Inc. v. Broudo et al., Justice Stevens argued that the majority's decision to require plaintiffs in securities fraud cases to prove a causal connection between their economic loss and the defendant's deceptive conduct was an unnecessary burden on victims of fraud. He contended that this requirement was not supported by legal precedent or legislative history, and it could potentially deter legitimate claims from being brought forward due to its stringent standard of proof. Furthermore, he expressed concern over how difficult it would be for plaintiffs to establish causation given the complexity and unpredictability of stock market fluctuations. In his view, once investors have shown they were misled into making a purchase at an inflated price due to fraudulent misrepresentation or omission by defendants - which is already challenging enough - they should be entitled to recover damages without having also demonstrate that this deception directly caused their financial losses.