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Comment by amarkov | Hacker News Reader

The question at this stage of the lawsuit isn't whether the investors actually did rely on the fraudulent claims, but whether each of the investors should have to show they did. The judge isn't saying that "well maybe it was a friend" contradicts their case.

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Exactly -- this does not prohibit each defrauded investor from pursuing their own case, but their reliance on the fraudulent claims has to be individually established rather than automatically assumed.

Wouldn't all these investors be considered accredited investors and thus be expected to make their own assessments and take their own risks?

Is "the company flat out lied to everyone" usually considered one of the risks you have to take?

No, but that is why you do due diligence.

Regardless of investor accreditation (AI, QC, or even QP), you still can't lie to investors.

Other than minimum levels of wealth, it just establishes different reporting and structures for the investments (usually things like K-1s, non-traded vehicles, and little to no liquidity).

Madoff is a great example of this - he took advantage of his investors by lying to them about results. He went to prison for securities fraud (I'm summarizing here), and the investors pursued various lawsuits to get their money back.

In the Madoff case, JPMorgan was not only fined over a billion dollars [1], but also sued (and settled) for over 2 billion with defrauded shareholders [2]. This was basically for their knowing about the fraud and not informing shareholders (again, a legalistic simplification).

[1] https://dealbook.nytimes.com/2014/01/07/jpmorgan-settles-wit...

[2] https://www.cnbc.com/2014/01/06/jpmorgan-to-pay-26-billion-t...

This will get appealed. Putting false material info in the public sphere in itself lends to punitive damages as a class even if compensatory damages are more nuanced. I dont recall anything like this in the Madoff ponzi.

Also, how deep did the Theranos lies go? This could be RICO which is it's own animal.

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