Catch-22 for Investors: Averaging-Down Held to Preclude Fraud Remedies

, New York Law Journal


Brian Murray and Lee Albert of Glancy, Binkow & Goldberg write that when an investment loses value, a common strategy is to buy additional shares at a lower price in order to "average down" the blended cost of the stock. Courts have routinely recognized this technique on class certification motions and have held such purchases do not render an investor atypical or inadequate as a class representative, but a recent Southern District decision held otherwise.

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