Vanderbilt Law Review

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The extended debate by the Institute illustrates the logical and even emotional difficulty of dealing with the victim of an admittedly intentional deception who has acted foolishly in his own behalf and does not seem to deserve recovery. The crux of the controversy in the common law deceit cases mirrors that in the 10b-5 cases:should the victim have to investigate, and what might trigger an obligation to investigate? As this discussion demonstrates, tort principles provide some guidance. In deceit cases, the obligations placed on the plaintiff arise from the requirement that his reliance be justified. To the extent that his knowledge makes the falsity of a representation "obvious," his reliance is unjustified. The term "obvious"is expandable, and courts can manipulate it to limit recovery.Finally, there is authority for the proposition that, wholly apart from the question of plaintiff's culpability, a plaintiff should be charged with the information he would have obtained from an investigation if, in light of his particular sophistication and knowledge,he had notice that he was being deceived, because proceeding in the face of such notice is tantamount to assumption of risk." With this examination of the common law of deceit as background, this Note undertakes to trace briefly" the treatment given the standard of care required of plaintiffs before Hochfelder, to analyze the decisions reconsidering this standard of care after Hochfelder, and to suggest a synthesis that will permit a continued evaluation of plaintiff's conduct in 10b-5 cases without running a foul of the Hochfelder scienter standard.