544 U.S. 336 (2005)
Respondents are individuals who bought stock in Dura Pharmaceuticals, Inc., on the public securities market between April 15, 1997, and February 24, 1998.1 They brought this securities fraud class action against Dura and some of its managers and directors in federal court.2
Their detailed amended complaint alleged that before and during the purchase period, Dura made false statements concerning both its drug profits and future FDA approval of a new asthmatic spray device.3 It further alleged that on February 24, 1998, Dura announced that its earnings would be lower than expected, principally due to slow drug sales, after which Dura's shares lost almost half their value, falling from about $39 per share to about $21.4
About eight months later, in November 1998, Dura announced that the FDA would not approve its new asthmatic spray device.5 The next day Dura's share price temporarily fell but almost fully recovered within one week.6
The complaint alleged that in reliance on the integrity of the market the plaintiffs paid artificially inflated prices for Dura securities and suffered damages thereby.7 It contained nothing significantly more than that allegation about economic losses attributable to the spray device misstatement.8
The District Court dismissed the complaint.9 In respect to the spray device claim it held that the complaint failed adequately to allege loss causation.10 The Court of Appeals for the Ninth Circuit reversed, holding that the complaint adequately alleged loss causation because it pleaded that the price at the time of purchase was overstated.11 The Supreme Court granted Dura's petition for certiorari.12
Whether a plaintiff in a private securities fraud action can satisfy the loss causation requirement simply by alleging and establishing that the price of the security on the date of purchase was inflated because of the misrepresentation?13
Private federal securities fraud actions require plaintiffs to prove six basic elements: a material misrepresentation, scienter, a connection with the purchase or sale of a security, reliance, economic loss, and loss causation. Loss causation means a causal connection between the material misrepresentation and the loss under 15 U.S.C. § 78u-4(b)(4).14 Judicially implied private securities fraud actions resemble common-law deceit actions.15 The common law has long required a plaintiff to show not only justifiable reliance but also actual economic loss proximately caused by the misrepresentation.16 An inflated purchase price will not itself constitute or proximately cause economic loss.17 At the moment of the transaction, the plaintiff owns a share of equivalent value.18 Any later loss may stem from changed economic circumstances or other market factors rather than the misrepresentation.19
No. The plaintiffs' complaint contained only one statement fairly describing any loss caused by the spray device misrepresentations.2021 That statement alleged that the plaintiffs paid artificially inflated prices for Dura securities and suffered damages.22 The allegation identifies no economic loss or causal connection after the truth emerged.23 The share price temporarily fell but almost fully recovered within one week after the FDA announcement.
Other factors therefore accounted for price movements, and the misrepresentation did not proximately cause a realized loss.24 The District Court correctly dismissed for failure to allege loss causation. The Ninth Circuit's contrary approach is inconsistent with the statutory requirement and the common-law roots of the action.25
A plaintiff cannot satisfy the loss causation requirement simply by alleging and establishing that the price of the security on the date of purchase was inflated because of the misrepresentation, so the Ninth Circuit judgment is reversed.26