Negative Causation [Securities] Law and Legal Definition

Negative causation refers to a defense used by a defendant stating that, part of a plaintiff’s damages were caused by factors other than the depreciation in value of the securities resulting from registration-statement defects. It is also known as loss causation defense. In addition, negative causation is an affirmative defense that reduces or avoids liability generally established by a defendant on a motion for summary judgment or at trial.