NosyBeagle
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LSDefine
Simple English definitions for legal terms
negative causation
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A quick definition of negative causation:
Negative causation is when something else, besides the thing being blamed, caused a problem. For example, in securities law, if a company's stock loses value because of mistakes in their paperwork, the company might argue that the stock would have lost value anyway because of other factors. If they can prove this, the amount of money they have to pay to the people who lost money on the stock will be reduced.
A more thorough explanation:
Definition: Negative causation refers to the defense that part of the plaintiff's damages were caused by factors other than the alleged wrongdoing. In securities law, it specifically refers to the argument that the plaintiff's losses were not solely caused by the depreciation in value of the securities resulting from registration-statement defects.
For example, if an investor sues a company for securities fraud, claiming that the company made false statements that caused the investor to buy the stock at an inflated price, the company may argue negative causation. They may claim that the investor's losses were actually caused by other factors, such as general market conditions or the investor's own decisions.
If negative causation is proven, the plaintiff's damages may be reduced.