Transaction Causation Law and Legal Definition

Transaction causation is a proof that a knowledgeable investor would not have made the investment in question, had He/she known all the facts. [Ray v. Citigroup Global Mkts., 482 F.3d 991 (7th Cir. Ill. 2007)]. It means that but for the fraudulent misrepresentation or omission, the investor would not have purchased or sold the security. [McCabe v. Ernst & Young, LLP, 494 F.3d 418 (3d Cir. N.J. 2007)].

Transaction causation requires only that a plaintiff establish that the violations in question caused the plaintiff to engage in the transaction in question. [De Kwiatkowski v. Bear, Stearns Co., 1997 U.S. Dist. LEXIS 13078 (S.D.N.Y. Aug. 28, 1997)].