Full opinion text
OPINION OF THE COURT SCIRICA, Circuit Judge. In this putative class action under § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, thousands of investors sued their broker-dealers, who traded on the National Association of Securities Dealers Automated Quotation System (NASDAQ), for breaching their duty of best execution. Despite the broker-dealers’ duty to execute trades under the most “favorable terms reasonably available,” the investors charge the defendants executed orders at the price offered on the central National Best Bid and Offer system (NBBO), failing to investigate other feasible alternatives that potentially offered better prices. With hundreds of thousands of investors in the putative class, this alleged practice affected hundreds of millions of transactions. The crux of this interlocutory appeal under Fed.R.Civ.P. 23(f) is whether plaintiffs’ securities fraud claims satisfy the requirements for class certification under Fed.R.Civ.P. 23. The District Court denied plaintiffs’ petition for class certification. We will affirm. I. The District Court had jurisdiction over the federal claims arising under the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and 28 U.S.C. § 1331, as well as supplemental jurisdiction over the state law claims under 28 U.S.C. § 1367. Plaintiffs filed a petition for permission to appeal the denial of class certification under Fed.R.Civ.P. 23(f) which we granted. As an interlocutory appeal, we have jurisdiction under 28 U.S.C. § 1292(e). II. In 1998, the Supreme Court responded to the risk of improvident and largely un-reviewable class certification decisions by amending Fed.R.Civ.P. 23 to provide for interlocutory appeal by permission of the court of appeals. Recognizing that denying or granting class certification is often the defining moment in class actions (for it may sound the “death knell” of the litigation on the part of plaintiffs, or create unwarranted pressure to settle nonmerito-rious claims on the part of defendants), the Rule acknowledges the extraordinary nature of class actions and permits the appellate courts to develop a coherent body of jurisprudence in this area. The new Rule provides that “[a] court of appeals may in its discretion permit an appeal from an order of a district court granting or denying class action certification under this rule if application is made to it within ten days after entry of the order.” Fed.R.Civ.P. 23(f). Before its adoption, courts were hesitant to invoke an alternative grant of appellate jurisdictional authority under 28 U.S.C. § 2072(c), which enabled the Supreme Court by rule to “define when a ruling of a district court is final for the purposes of appeal under section 1291.” 28 U.S.C. § 2072(c); see also Blair v. Equifax Check Servs., Inc., 181 F.3d 832, 833 (7th Cir.1999) (noting this authority “had gone unused, in part because it invites the question whether a particular rule truly ‘defines’ or instead expands appellate jurisdiction”); 7B Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1802, pp. 105-06 (West Supp.2000) (hereinafter Wright, Miller & Kane) (“[Rule 23(f)] is modelled on Section 1292(b), but differs in significant respects from that device in that it requires only appellate court approval of the appeal and it does not require that the district court’s decision involve’ a controlling question of law’ about which the courts are divided.”). On occasion, courts granted writs of mandamus to review certification decisions but with an uneasiness that their actions stretched the writ’s traditionally restrictive parameters. See 5 James Wm. Moore et al., Moore’s Federal Practice § 23.61[9][c] (discussing standard and cases); see also, e.g., In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293 (7th Cir.1995) (granting order of mandamus to rescind class certification). Although we have issued rulings on Rule 23(f) motions, we have yet to articulate standards for granting or denying permission to appeal. The Committee Note is always a good starting point. It emphasizes that “[t]he court of appeals is given unfettered discretion whether to permit the [interlocutory] appeal, akin to the discretion exercised by the Supreme Court in acting on a petition for certiorari.” Comm. Note, Fed. R.Civ.P. 23(f). The Note also sketches a rough outline of the types of cases courts of appeals should review: “Permission is most likely to be granted when the certification decision turns on a novel or unsettled question of law, or when, as a practical matter, the decision of certification is likely dispositive of the litigation.” Id.) see also 5 Moore’s Federal Practice § 23.61[9][b]. To provide further guidance on how to separate the wheat from the chaff, the Note instructs that several concerns justify expansion of present opportunities to appeal. An order denying certification may confront the plaintiff with a situation in which the only sure path to appellate review is by proceeding to final judgment on the merits of an individual claim that, standing alone, is far smaller than the costs of litigation. An order granting certification, on the other hand, may force a defendant to settle rather than incur the costs of defending a class action and run the risk of potentially ruinous liability. Comm. Note, Fed.R.Civ.P. 23(f). We can glean from the Note, therefore, at least three principles to guide the appellate courts in their exercise of discretionary jurisdiction: (1) when denial of certification effectively terminates the litigation because the value of each plaintiffs claim is outweighed by the costs of stand-alone litigation; (2) when class certification places inordinate or hydraulic pressure on defendants to ' settle, avoiding the risk, however small, of potentially ruinous liability; and (3) when an appeal implicates novel or unsettled questions of law; in this situation, early resolution through interlocutory appeal may facilitate the orderly development of the law. But interlocutory review is not cabined by these circumstances. The Note signals that the new Rule gives appellate courts broad discretion. For example, an error in the class certification decision that does not implicate novel or unsettled legal questions may still merit interlocutory review given the consequences likely to ensue. To put it another way, if the appellant demonstrates that the ruling on class certification is likely erroneous, “ ‘taking into account the discretion the district judge possesses in implementing Rule 23, and the correspondingly deferential standard of appellate review,’ ” Mowbray, 208 F.3d at 293 (quoting Blair, 181 F.3d at 835), interlocutory review may be proper. Furthermore, as explained in the Note, interlocutory review is not constrained by the potentially limiting requirement of 28 U.S.C. § 1292(b) that the district court order “involve! ] a controlling question of law as to which there is a substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” Yet if allowing the litigation to follow its natural course would provide the moving party with an adequate remedy, interlocutory review will generally prove unnecessary. In the end, however, the courts of appeals are afforded wide latitude as “[pjermission to appeal may be granted or denied on the basis of any consideration that the courts of appeals finds persuasive.” Comm. Note, Fed.R.Civ.P. 23(f). We believe these principles provide a useful template for courts to work from when evaluating petitions under Rule 23(f). It is, of course, difficult to foresee all the permutations to which this rule will apply, and courts will have the task of exercising their best judgment in making these decisions. See Lienhart, 255 F.3d at 144-45 (rejecting “stringent standards” for review of Rule 23(f) petitions); Blair, 181 F.3d at 834 (“[I]t would be a mistake for us to draw up a list that determines how the power under Rule 23(f) [should] be exercised. Neither a bright-line approach nor a catalog of factors would serve well— especially at the outset, when courts necessarily must experiment with the new class of appeal.”); see also Comm. Note, Fed. R.Civ.P. 23(f) (“The courts of appeals will develop standards for granting review that reflect the changing areas of uncertainty in class litigation.”). Further, as the Committee Note mentions, class certification decisions often involve “familiar and almost routine issues” that do not necessitate interlocutory appeal. If granting the appeal, however, would permit us to address (1) the possible case-ending effect of an imprudent class certification decision (the decision is likely dispositive of the litigation); (2) an erroneous ruling; or (3) facilitate development of the law on class certification, then granting the motion would be appropriate. But these instances should not circumscribe our discretion; there may also be other valid reasons for the exercise of interlocutory review. Again, we emphasize that the courts of appeals have been afforded the authority to grant or deny these petitions “on the basis of any consideration that the court of appeals finds persuasive.” Comm. Note, Fed.R.Civ.P. 23(f). The claims here touch on several reasons justifying interlocutory appeal. On the one hand, some of the securities claims pressed by the putative class members may be too small to survive as individual claims. On the other, certifying the class may place unwarranted or hydraulic pressure to settle on defendants. Either way, an adverse certification decision will likely have a dispositive impact on the course and outcome of the litigation. Moreover, this case raises fundamental questions about what type of private securities claims merit class certification. For these reasons, the motion was properly granted. III. We review a decision granting or denying class certification for abuse of discretion. In re LifeUSA Holding Inc., 242 F.3d 136, 143 (3d Cir.2001); Holmes v. Pension Plan of Bethlehem Steel Corp., 213 F.3d 124, 136 (3d Cir.2000). The district court abused its discretion if its decision “ ‘rests upon a clearly erroneous finding of fact, an errant conclusion of law or an improper application of law to fact.’ ” In re General Motors Corp. Pick Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 783 (3d Cir.1995) (hereinafter “G.M. Trucks”) (quoting Int’l Union, UAW v. Mack Trucks, Inc., 820 F.2d 91, 95 (3d Cir.1987)). A class certification decision requires a thorough examination of the factual and legal allegations. Barnes v. Am. Tobacco Co., 161 F.3d 127, 140 (3d Cir.1998), cert. denied, 526 U.S. 1114, 119 S.Ct. 1760, 143 L.Ed.2d 791 (1999). For this purpose, “it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question.” General Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 160, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982); see also Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 634-35, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997) (Breyer, J., concurring in part and dissenting in part); 7B Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, § 1785, p. 16 (West Supp.2000). “Before deciding whether to allow a case to proceed as a class action, ... [courts] should make whatever factual and legal inquiries are necessary under Rule 23.” Szabo v. Bridgeport Machs. Inc., 249 F.3d 672, 676 (7th Cir.2001); see also 5 Moore’s Federal Practice § 23.46[4] (“[B]eeause the determination of a certification request invariably involves some examination of factual and legal issues underlying the plaintiffs’ cause of action, a court may consider the substantive elements of the plaintiffs’ case in order to envision the form that a trial on those issues would take.”) (footnotes omitted). Over twenty-five years ago in Eisen v. Carlisle & Jacquelin, the Supreme Court cautioned against going beyond the pleadings in class certification decisions. 417 U.S. 156, 177, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974) (“[N]othing in either the language or history of Rule 23 ... gives a court any authority to conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action.”). But this admonition must be examined in context. At the time, it was ancillary to the principal issue of whether Fed.R.Civ.P. 23 required a class representative in a securities class action to provide notice to all class members. With a claim that amounted to no more than seventy dollars, the plaintiff in Eisen sought to shift his notice burden to the defendant because providing notice to the 2.25 million potential class members was extraordinarily costly (roughly $225,000). The district court held that the defendant should bear 90% of the cost, because the plaintiff was “more than likely” to “prevail on his claims.” Holding this burden could not be shifted, the Supreme Court affirmed the reversal by the court of appeals. Not long after Eisen, the Court stepped away from this bright-line declaration in Coopers & Lybrand v. Livesay, when it held that [evaluation of many of the questions entering into determination of class action questions is intimately involved with the merits of the claims. The typicality of the representative’s claims or defenses, the adequacy of the representative, and the presence of common questions of law or fact are obvious examples. The more complex determinations required in Rule 23(b)(3) class actions entail even greater entanglement with the merits.... 437 U.S. 463, 469 n. 12, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978) (quotation and citation omitted). Subsequently, in General Tel. Co. of Southwest v. Falcon, the Court appeared to move even further away from Eisen, recognizing that [s]ometimes the issues are plain enough from the pleadings to determine whether the interests of the absent parties are fairly encompassed within the named plaintiffs claim, and sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question.... [Actual, not presumed conformance with Rule 23(a) remains ... indispensable. Falcon, 457 U.S. at 160, 102 S.Ct. 2364.. This reasoning applies with equal force to certification questions surrounding Fed. R.Civ.P. 23(b)(3). Szabo, 249 F.3d at 677. As the Court concluded in Livesay, class certification may require courts to answer questions that are often “ ‘enmeshed in the factual and legal issues comprising the plaintiffs cause of action.’ ” 437 U.S. at 469, 98 S.Ct. 2454 (quoting Mercantile Nat’l Bank v. Langdeau, 371 U.S. 555, 558, 83 S.Ct. 520, 9 L.Ed.2d 523 (1963)). To address these questions, courts may “delve beyond the pleadings to determine whether the requirements for class certification are satisfied.” 5 Moore’s Federal Practice § 23.61[5]; Szabo, 249 F.3d at 677 (holding courts may “look[ ] beneath the surface of a complaint” to “make a preliminary inquiry into the merits”); see also Amchem, 521 U.S. at 615, 117 S.Ct. 2231 (Fed.R.Civ.P. 23(b)(3) invites a “close look” before determining class certification); 7B Wright, Miller & Kane, § 1785, p. 16 (West Supp. 2000) (courts not precluded from “necessary inquiry into the underlying elements of the case in order to evaluate whether Rule 23 has been met”); Moore’s Federal Practice, Manual For Complex Litigation (Third) § 30.1 (“The decision on whether or not to certify a class, therefore, can be as important as decisions on the merits of the action and should be made only after consideration of all relevant evidence and arguments presented by the parties.”). Since Eisen was decided, the nature of class actions and how they are litigated have undergone a sea change. Irrespective of the merits, certification decisions may have a decisive -effect on litigation. As mentioned, if individual claims are small, then plaintiffs may not have the incentive or resources to pursue their claims if certification is denied—sounding the “death knell” to the litigation. On the other hand, granting certification may generate unwarranted pressure to settle non-meritorious or marginal claims. Rhone-Poulenc, 51 F.3d at 1299-1300 (granting order of mandamus to rescind certification based in part on the “the demonstrated great likelihood that the plaintiffs’ claims, despite their human appeal, lack legal merit”); see also G.M. Trucks, 55 F.3d at 784-85 (vacating class certification for settlement and remanding for further development on the record). In a similar vein, the Court of Appeals for the Fifth Circuit has concluded that “[g]oing beyond the pleadings is necessary, as a court must understand the claims, defenses, relevant facts, and applicable substantive law in order to make a meaningful determination of the certification issues.” Castano, 84 F.Sd at 744 (decertifying class that sued tobacco manufacturers for nicotine addiction). In Castaño, the court held that a mass tort cannot be properly certified without a prior track record of trials from which the district court can draw the information necessary to make the predominance and superiority analysis required by rule 23. This is because certification of an immature tort results in a higher than normal risk that the class action may not be superior to individual adjudication. Id. at 747. Other courts have followed similar approaches. Szabo, 249 F.3d at 675-78; see also Rutstein v. Avis Rent-A-Car Sys., Inc., 211 F.3d 1228, 1234 (11th Cir.2000); Hanon v. Dataproducts Corp., 976 F.2d 497, 508-09 (9th Cir.1992). In reviewing a motion for class certification, a preliminary inquiry into the merits is sometimes necessary to determine whether the alleged claims can be properly resolved as a class action. This is such an instance. We must probe beyond the surface of plaintiffs’ allegations in performing our review to assess whether plaintiffs’ securities claims satisfy Fed.R.Civ.P. 23’s requirements. IV. A. This case is before us for the second time. We have already provided a succinct description of the facts, including the operation of the NASDAQ market and defendants’ role. Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 135 F.3d 266 (3d Cir.1998) (en banc) (hereinafter “Newton”). Plaintiff-Appellants are investors who purchased and sold securities on the NASDAQ market, the major electronic market for “over-the-counter” securities, during the ... period from November 4, 1992 to [August 28, 1996] (“the class period”). The defendants are NASDAQ market makers. NASDAQ is a self-regulating market owned by the National Association of Securities Dealers (“NASD”), subject to oversight by the Securities and Exchange Commission (“SEC”). An “over-the-counter” market like NASDAQ differs in important respects from the more familiar auction markets, like the New York and American Stock Exchanges. The NYSE and AMEX markets are distinguished by a physical exchange floor where buy and sell orders actually “meet,” with prices set by the interaction of those orders under the supervision of a market “specialist.” In a dealer market like NASDAQ, the market exists electronically, in the form of a communications system which constantly receives and reports the prices at which geographically dispersed market makers are willing to buy and sell different securities. These market makers compete with one another to buy and sell the same securities using the electronic system; NASDAQ is, then, an electronic inter-dealer quotation system. In a dealer market, market makers create liquidity by being continuously willing to buy and sell the security in which they are making a market. In this way, an individual who wishes to buy or sell a security does not have to wait until someone is found who wishes to take the opposite side in the desired transaction. To account for the effort and risk required to maintain liquidity, market makers are allowed to set the prices at which they are prepared to buy and sell a particular security; the difference between the listed “ask” and “bid” prices is the “spread” that market makers capture as compensation. The electronic quotation system ties together the numerous market makers for all over-the-counter securities available on NASDAQ. All NASDAQ market makers are required to input their bid and offer prices to the NASD computer, which collects the information and transmits, for each security, the highest bid price and lowest ask price currently available. These prices are called the “National Best Bid and Offer,” or NBBO. The NASD computer, publicly available to all NASDAQ market makers, brokers and dealers, displays and continuously updates the NBBO for each offered security. Plaintiffs allege that technological advances made it feasible during the class period for the defendant market makers to execute orders at prices quoted on private on-line services like SelectNet and Instinet and that those prices were frequently more favorable to their investor clients than the NBBO price. According to plaintiffs, the defendants regularly used these services and knew that prices better than NBBO were often available through them. Even though they knew that their investor clients expected them to secure the best reasonably available price, plaintiffs say, the defendants executed plaintiffs’ orders at the NBBO price when they knew that price was inferior and when they, at the same time, were trading at the more favorable price for their own accounts. In this way, they were able to inflate their own profit margins at the expense of their investor clients. This practice is alleged to violate section 10 of the Securities [Exchange] Act of 1934, 15 U.S.C. § 78j, and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240 .10b-5. The plaintiffs also charge defendants with two other violations of section 10 and Rule 10b-5. Market makers who simultaneously hold a market order for both sides of a transaction may obtain more favorable prices than the NBBO by “crossing” these in-house orders. Transactions handled in this way are executed within the spread, giving both the purchaser and the seller a better price. Similarly, a customer order can be matched by a market maker with an in-house limit order on the other side of the transaction. Since a limit order specifies a particular price at which to execute a transaction, matching another customer order at that price may beat the currently displayed NBBO quote for that security. Plaintiffs allege that the failure of the defendants to execute orders of their clients in these ways when feasible constitutes a fraudulent practice because, by executing at the NBBO rather than matching customer orders, the defendants capture the full market “spread” as a fee for their services without incurring any actual risk in the transaction. Newton, 135 F.3d at 268-69. Since the initiation of this action, the Securities and Exchange Commission has promulgated new rules that effectively end the alleged improper practice by the defendants. See Order Execution Obligations, Exchange Act. Rel. No. 34-37619A, 61 Fed.Reg. 48290, 48306-16, 48322-23 (Sept. 12, 1996) (“While in the past quote-based executions in OTC [over the counter] securities were generally recognized as satisfying best execution obligations, the development of efficient new facilities has altered what broker dealers must consider in seeking execution of customer orders.”); see also Newton, 135 F.3d at 271. The new regulations require the NBBO to incorporate prices displayed on Instinet and SelectNet as well as other sources of liquidity. See 17 C.F.R. §§ 240.11Acl-l to -4 (2000). B. Defendants initially moved to dismiss this action under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief could be granted. At the request of the District Court, defendants converted their motion into one for summary judgment which was subsequently granted. The District Court held that plaintiffs’ claims failed to satisfy two requirements necessary to maintain a Rule 10b-5 securities violation — misrepresentation or omission of a material fact, and scienter — because defendants’ “duty of best execution” remained ill-defined during the class period. In re Merrill Lynch, Sec. Litig., 911 F.Supp. at 769-71. Without a clear standard to apply against defendants’ employment of an industry-wide practice, the court found the nondisclosure of their trading execution practice, along with their implied representation to obtain best execution, did not constitute a misrepresentation or omission of material fact. Id. Even if the practice constituted a material misrepresentation, the district court held defendants had not formed the requisite scienter, or intent to deceive, because they were not aware their practice actually violated the securities laws. Id. at 771-72. On appeal, a divided panel of this court affirmed. We granted rehearing en banc. The en banc court unanimously reversed the district court and remanded, holding the execution of trades at the NBBO, albeit the industry standard, could still be considered fraudulent behavior violating the standards of Rule 10b-5. Newton, 135 F.3d at 274. Noting this practice could constitute a material misrepresentation with scienter when better prices were reasonably available, we expressed no opinion on defendants’ liability, only whether defendants’ practice could be actionable under Rule 10b-5. Id. at 272-74. On remand, plaintiffs amended their complaint, extending the class period to the time new securities regulations took effect outlawing the defendants’ alleged tortious practice. Plaintiffs then moved for class certification which the District Court denied. An interlocutory appeal under Fed.R.Civ.P. 23(f) was then granted. C. Plaintiffs contend defendants’ behavior in this case was unvarying, alleging it was their established practice to execute trades at prices displayed solely on the NBBO without investigating other sources. They claim this “common scheme” provides a uniform course of unlawful conduct well-suited for adjudication as a class action. Plaintiffs also argue that during the class period defendants capitalized on their access to alternative trading sources to find better prices when trading on their own accounts. As noted in Newton, an SEC study reported that a “two-tiered market” existed during the class period where market makers exploited these services to garner better prices for themselves while simultaneously denying them to their customers. Id. at 273. For' their part, defendants argue that without examining each transaction, then-past ability to obtain a better price for a particular trade is purely speculative. On appeal, the availability of better prices remains hotly contested. In this interlocutory appeal, we do not decide whether defendants’ alleged practice constitutes a Rule 10b-5 securities violation with respect to each individual member of the putative class. Our inquiry only addresses whether the federal securities claims alleged by the investors satisfy the requirements demanded by Fed. R.Civ.P. 23. V. To determine whether the claims alleged by the putative class meet the requirements for class certification, we must first examine the underlying cause of action — -in this case, a Rule 10b-5 private securities fraud claim. See Barnes, 161 F.3d at 138; McCarthy v. Kleindienst, 741 F.2d 1406, 1412 (D.C.Cir.1984). This analysis is critical because class certification under Fed.R.Civ.P. 23(b)(3) is permissible only when “questions of law or fact common to the members of the class predominate over any questions affecting only individual members.” Fed.R.Civ.P. 23(b)(3). For the elements of the Rule 10b-5 claim which remain in dispute, “Requiring proof of individualized reliance [and injury] from each member of the proposed plaintiff class effectively would ... prevent[ ] [plaintiffs] from proceeding with a class action, since individual issues then would ... overwhelm[ ] the common ones.” Basic Inc. v. Levinson, 485 U.S. 224, 242, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988). On the other hand, presuming these elements would resolve “the problem of balancing the substantive requirement of proof of reliance [and injury] in securities cases against the procedural requisites of [Federal Rule of Civil Procedure] 23.” Id. (quotation and citation omitted); see also Peil v. Speiser, 806 F.2d 1154 (3d Cir.1986) (upholding presumption of reliance in Rule 10b-5 claims based on fraud-on-the-market theory); Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912 (3d Cir.1992) (affirming class certification where reliance presumed) (hereinafter “Hoxworth II”); William Rubenstein, A Transnational Model of Adjudication, 89 Geo. L.J. 371, 391-92 (2001) (discussing effect of presuming reliance in securities class actions). If proof of the essential elements of the cause of action requires individual treatment, then class certification is unsuitable. See Binder v. Gillespie, 184 F.3d 1059, 1063-66 (9th Cir.1999) (upholding class decertification where presumption of reliance and loss unavailable), cert. denied, 528 U.S. 1154, 120 S.Ct. 1158, 145 L.Ed.2d 1070 (2000). Under Rule 10b-5 causation is two-pronged. Huddleston v. Herman & MacLean, 640 F.2d 534, 549 n. 24 (5th Cir.1981), aff'd in part, rev’d in pari on other grounds, 459 U.S. 375, 103 S.Ct. 683, 74 L.Ed.2d 548 (1983); see also James D. Cox, Robert W. Hillman & Donald C. Langevoort, Securities Regulation: Cases and Materials 769-71 (3d ed.2001); 5 A. Jacobs, The Impact of Rule 10b-5 § 64.01[a], at 3-221 to 3-222 (Supp.1980). Rebanee, or transaction causation, establishes that but for the fraudulent misrepresentation, the investor would not have purchased or sold the security. Suez Equity Investors, L.P., Sei Assocs. v. Toronto Dominion Bank, 250 F.3d 87, 95-96 (2d Cir.2001); Weiner v. Quaker Oats Co., 129 F.3d 310, 315 (3d Cir.1997); Robbins v. Roger Props., Inc., 116 F.3d 1441, 1447 (11th Cir.1997). Loss causation demonstrates that the fraudulent misrepresentation actually caused the loss suffered. Suez Equity Investors, 250 F.3d at 95-96; EP MedSystems, Inc. v. EchoCath, Inc., 235 F.3d 865, 883-84 (3d Cir.2000). We must first address whether plaintiffs’ claims are entitled to class-wide presumptions of reliance and economic loss before turning to the requirements for certification under Fed.R.Civ.P. 23(b)(3). A. Section 10(b) of the Securities Exchange Act of 1934 makes it unlawful “[t]o use or employ, in connection with the purchase or sale of any security registered on a national securities exchange ... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [Securities and Exchange] Commission may prescribe.” 15 U.S.C. § 78j(b). Under this statute, the Securities and Exchange Commission promulgated Rule 10b-5 which provides: It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality 21 of interstate commerce, or of the mails or of any facility of any national securities exchange, (a) to employ any device, scheme, or artifice to defraud, (b) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. 17 C.F.R. § 240.10b-5. In Newton, we set forth the necessary elements of a Rule 10b-5 violation: To state a claim for securities fraud under § 10 of the Securities [Exchange] Act of 1934 and Rule 10b-5, plaintiffs must demonstrate: (1) a misrepresentation or omission of a material fact in connection with the purchase or sale of a security; (2) scienter on the part of the defendant; (3) reliance on the misrepresentation; and (4) damage resulting from the misrepresentation. Newton, 135 F.3d at 269; see also Semerenko v. Cendant Corp., 223 F.3d 165, 174 (3d Cir.2000). It is important to recognize that the facts of this case do not resonate with those typical of securities violations under Rule 10b-5. Customarily those claims involve a fraudulent material misrepresentation or omission that affects a security’s value. See EchoCath, 235 F.3d at 884 (citing typical cases: Semerenko, 223 F.3d at 171 (financial statement); Weiner, 129 F.3d at 311-12 (corporation’s financial condition); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1415-17 (3d Cir.1997) (projected future earnings); In re Westinghouse Sec. Litig., 90 F.3d 696, 700-01 (3d Cir.1996) (fraudulent representation of company’s state of affairs)). The alleged material nondisclosure here consisted of a broker-dealer accepting an investor’s order under the implied representation of the duty of best execution. This duty requires a broker-dealer to “use reasonable efforts to maximize the economic benefit to the client in each transaction.” Newton, 135 F.3d at 270. A broker-dealer who “accepts such an order while intending to breach that duty makes a misrepresentation that is material to the purchase or sale [of a security].” Id. at 269. If the order was executed in a manner inconsistent with this duty, it was also performed with scien-ter. Id. at 273-74. Despite defendants’ claim that execution at the NBBO price represented an acceptable industry-wide practice, we held in Newton that plaintiffs had alleged a claim that at least satisfied Rule 10b-5’s material misrepresentation and scienter requirements. Id. at 274-75. We did not examine the other elements of a Rule 10b-5 claim — specifically, reliance and loss causation — because these elements were not relevant to the duty of best execution. On remand, the District Court picked up where we left off. Although the court found no issues affecting misrepresentation and scienter that would preclude class certification, it held that individual questions on reliance and economic loss presented formidable obstacles to class certification. The parties disagree whether evidence of reliance and economic loss are consistent with each trade or would require individual treatment at trial. Defendants argue that reliance and economic loss cannot be presumed across the class for the hundreds of millions of trades at issue. Because only class members who detrimentally relied on a defendants’ execution practice would have a cause of action, they maintain the individual inquiry necessary to establish reliance and economic loss renders plaintiffs’ claims unfit for class certification. Whether proof of reliance and economic loss are unique to each investor, necessitating a trade-by-trade examination, remains contested. B. In Rule 10b-5 securities class actions, a plaintiff must prove reliance on a fraudulent material misrepresentation or omission. Kline v. First W. Gov’t Sec., Inc., 24 F.3d 480, 487-88 (3d Cir.1994); Peil, 806 F.2d at 1160 (discussing reliance). “It is axiomatic that a private action for securities fraud must be dismissed when a plaintiff fails to plead that he or she reasonably and justifiably relied on an alleged misrepresentation.” Semerenko, 223 F.3d at 178 (citing Weiner, 129 F.3d at 315; In re Burlington Coat Factory, 114 F.3d at 1417). This burden requires a plaintiff to demonstrate that defendants’ conduct caused him “ ‘to engage in the transaction in question.’ ” Robbins, 116 F.3d at 1447 (quoting Currie v. Cayman Res. Corp., 835 F.2d 780, 785 (11th Cir.1988)); see also Peil, 806 F.2d at 1160. “Recognizing that the requirement of showing direct reliance presents an unreasonable evidentiary burden in a securities market where face-to-face transactions are rare and where lawsuits are brought by classes of investors ... this court has adopted a rule that creates a presumption of reliance in certain cases.” Semerenko, 223 F.3d at 178. “The reason for shifting the burden on the reliance issue has been an assumption that the plaintiff is generally incapable of proving that he relied on a material [nondisclosure].” Sharp v. Coopers & Lybrand, 649 F.2d 175, 188 (3d Cir.1981), overruled in part on other grounds, In re Data Access Sys. Sec. Litig., 843 F.2d 1537 (3d Cir.1988) (en banc). The seminal opinion on the presumption of reliance in securities fraud cases is Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 153-54, 92 S.Ct. 1456, 31 L.Ed.2d 741 (1970). Affiliated Ute involved an effort by some members of the Ute tribe to distribute its assets among its members. For this purpose, the tribe placed its assets in a corporation and issued each member ten shares of stock that were subsequently deposited in a local bank. As fiduciary, the bank assumed responsibility for enforcing the stocks’ restrictions. For its own benefit and unknown to the Utes, the bank facilitated sales of the stock to outside investors at costs below its fair market value. When the Utes discovered the bank’s practice, they sued under Rule 10b-5. In defense, the bank claimed the Utes failed to establish reliance on a misrepresentation of material fact. But the Supreme Court held the plaintiffs were entitled to a presumption of reliance, holding that in cases “involving primarily a failure to disclose [material facts], positive proof of reliance is not a prerequisite to recovery.” Id. at 153, 92 S.Ct. 1456. Applying this precept, we have held that “the proper approach to the problem of reliance is to analyze the plaintiffs allegations, in light of the likely proof at trial, and determine the most reasonable placement of the burden of proof of reliance.” Sharp, 649 F.2d at 188; see also Joseph v. Wiles, 223 F.3d 1155, 1162 (10th Cir.2000) (recognizing that “Affiliated Ute presumption of reliance exists in the first place to aid plaintiffs when reliance on a negative would be practically impossible”); Blackie v. Barrack, 524 F.2d 891, 907 (9th Cir.1975) (same). We extended the Affiliated Ute presumption of reliance to investors when securities dealers failed to disclose a pricing policy that overcharged investors in the purchase and sale of “penny stocks.” In Hoxworth II, investors alleged they were systematically defrauded by a securities dealer’s failure to disclose its pricing policy of excessive markups or markdowns on different securities. 980 F.2d 912. Because of this uniform, material nondisclosure, we concluded that the “plaintiffs [were] entitled to the presumption of reliance set forth in Affiliated Ute.” Id. at 924; cf. Eisenberg v. Gagnon, 766 F.2d 770, 786-87 (3d Cir.1985) (holding individual questions of reliance in securities class action involving investment in tax shelters did not preclude certification). In analogous cases, reliance has not been a hurdle to class certification. See Grandon v. Merrill Lynch & Co., Inc., 147 F.3d 184, 190 (2d Cir.1998) (“A broker-dealer commits fraud (in violation of § 10(b) and Rule 10b — 5) by charging customers excessive markups without proper disclosure.”); Bank of Lexington & Trust Co. v. Vining-Sparks Sec., Inc., 959 F.2d 606, 613 (6th Cir.1992) (“[T]he failure to disclose exorbitant mark-ups violates section 78j(b) and Rule 10b-5.”); Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 942-46 (3d Cir.1985) (reliance does not bar private securities fraud action involving nondisclosure of fraudulent credit terms on margin accounts); Ettinger v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 122 F.R.D. 177, 180, 182 (E.D.Pa.1988) (reliance not an issue in securities class action alleging securities dealer failed to disclose improper markups on bonds). Investors may also be entitled to a rebuttable presumption of reliance under the “fraud-on-the-market theory.” This is because “in an efficient market the misinformation directly affects the stock prices at which the investor trades and thus, through the inflated or deflated price, causes injury even in the absence of direct reliance.” In re Burlington Coat Factory, 114 F.3d at 1419 n. 8 (citing Basic Inc., 485 U.S. at 241-42, 108 S.Ct. 978). Reliance may be presumed when a fraudulent misrepresentation or omission impairs the value of a security traded in an efficient market. Basic Inc., 485 U.S. at 241-42, 108 S.Ct. 978; Semerenko, 223 F.3d at 178; In re Burlington Coat Factory, 114 F.3d at 1419 n. 8. Here plaintiffs’ claims do not involve an omission or misrepresentation that affected the value of a security in an efficient market. Therefore, a presumption of reliance based on this theory would be inappropriate. The District Court did not explicitly rule on whether reliance could be presumed. Instead the court observed that the investors’ trades “involved multiple circumstances which bear decisively upon the existence of reliance.” In re Merrill Lynch, et al. Sec. Litig., 191 F.R.D. 391, 395 (D.N.J.1999) (hereinafter “Merrill Lynch"). On this point, the court found that some plaintiffs may have known about the defendants’ practice, belying their argument. Id. (“The degree of sophistication of the putative class members varies widely. Some, no doubt, were new to the world of NASDAQ trading; some were institutional investors.”). Plaintiffs contend that defendants’ uniform practice of executing trades at the NBBO price, even if better prices were reasonably available from alternative sources, and their failure to disclose the practice to their customers warrant a presumption of reliance. Defendants respond that at least some plaintiffs knew of the execution practice which nullifies their reliance. In support, they cite several news articles describing the practice as well as an SEC report noting that institutional investors (who fall within the putative class’s broad definition) used alternative electronic trading sources to obtain better prices for their trades. Br. of Appellees at 56-57. Because some plaintiffs knew or should have known of their practice, defendants assert that reasonable reliance on the alleged nondisclosure did not occur class-wide. For this reason, a presumption of reliance is arguably unavailable. See Straub v. Vaisman & Co., Inc., 540 F.2d 591, 595-98 (3d Cir.1976). While it seems apparent that some class members likely knew of defendants’ practice, this knowledge does not necessarily invalidate the presumption. When defendants fail to disclose material information about a uniform practice involving the purchase or sale of securities, plaintiffs may be entitled to a presumption of reliance which defendants may rebut. See, e.g., Affiliated Ute, 406 U.S. at 153-54, 92 S.Ct. 1456; Hoxworth II, 980 F.2d at 924; Blackie, 524 F.2d at 905-06; see also In re Prudential Ins. Co. of Am. Sales Practices Litig., 148 F.3d 283, 314 (3d Cir.1998) (approvingly noting conclusion that “because plaintiffs’ fraud-based claims stem largely from misleading omissions, reliance can be presumed”) (quotation and citation omitted) (hereinafter “Prudential"). Presuming reliance class-wide is proper when the material nondisclosure is part of a common course of conduct. Hoxworth II, 980 F.2d at 924 (holding class entitled to presumption of reliance against securities dealer for failure to disclose exorbitant pricing policy for securities); see also Prudential, 148 F.3d at 314; Ettinger, 122 F.R.D. at 180. To reiterate, the investors have alleged that the broker-dealers failed to disclose their policy of executing NASDAQ trades at the NBBO price. Like a securities dealer’s failure to disclose its policy of overcharging investors, defendants’ execution of investors’ trades at the NBBO price, when better prices may have been available from alternative services, constitutes a potentially fraudulent common course of conduct from which reliance can be presumed. See HoxwoHh II, 980 F.2d at 924 (holding plaintiffs entitled to presumption of reliance because of defendants’ nondisclosure of pricing policy); see also Prudential, 148 F.3d at 314. We will not require each plaintiff to prove he relied on a practice which defendants did not affirmatively disclose. See Sharp, 649 F.2d at 188-89; Ettinger, 122 F.R.D. at 180. Because their allegations of a uniform nondisclosure would make it impractical for investors to affirmatively prove their lack of knowledge of defendants’ practice, the burden of rebutting a presumption of reliance is properly placed on defendants here. Therefore, under this set of facts, we hold presuming reliance would be appropriate because defendants allegedly failed to disclose their trade execution practice. C. 1. Under Rule 10b-5, a plaintiff must also establish that he suffered an economic loss that was caused by defendant’s fraudulent conduct. Semerenko, 223 F.3d at 185; Huddleston, 640 F.2d at 549. If economic loss is evident, then plaintiff must prove a “sufficient causal nexus between the loss and the alleged [nondisclosure].” Semerenko, 223 F.3d at 184. Loss causation derives its function from the “standard rule of tort law that the plaintiff -must allege and prove that, but for the defendant’s wrongdoing, the plaintiff would not have incurred the harm of which he complains.” Bastian v. Petren Res. Corp., 892 F.2d 680, 685 (7th Cir.1990). Initially, loss causation was a requirement established by the courts. In re Phillips Petroleum Sec. Litig., 881 F.2d 1236, 1244 (3d Cir.1989) (citing Huddleston, 640 F.2d at 549); Angelastro, 764 F.2d at 942^13; see also Bastian, 892 F.2d at 685. But under the Private Securities Litigation Reform Act of 1995, it became a statutory element of private securities fraud claims under Rule 10b-5. The Act provides that “[i]n any private action arising under this chapter, the plaintiff shall have the burden of proving that the act or omission of the defendant alleged to violate this chapter caused the loss for which the plaintiff seeks to recover damages.” 15 U.S.C. § 78u-4(b)(4). In any event, it is necessary here to separate the concept of economic loss from the issue of loss causation. Of particular importance is whether plaintiffs have, in fact, suffered an economic loss. “[F]ailure to show actual damages is a fatal defect in a Rule 10b-5 cause of action.” Feldman v. Pioneer Petroleum, Inc., 813 F.2d 296, 302 (10th Cir.1987); see also 2 T. Hazen, Law of Securities Regulation § 13.7, p. 553 (3d ed. 1995) (“Failure to allege or prove actual damages will result in dismissal of any 10b-5 damage claim.”). For this reason, “[investors cannot complain about a fraud that did not cause them any harm.” Latigo Ventures v. Laventhol & Horwath, 876 F.2d 1322, 1325 (7th Cir.1989); Huddleston, 640 F.2d at 555. The economic loss that plaintiffs claim would be the difference between the price at which their trades were executed and the “better” price allegedly available from an alternative trading source. Therefore, to show economic loss, plaintiffs must establish that a “better” price was obtainable for each executed trade. If a “better” price was unavailable for a particular trade, then a class member could not have suffered injury and cannot maintain a Rule 10b-5 claim. 2. The District Court held that economic loss could neither be established nor presumed class-wide. Merritt Lynch, 191 F.R.D. at 397. Finding that defendants’ practice did not detrimentally affect the value of plaintiffs’ securities across the entire market nor did it necessarily result in overcharging, the District Court found no resemblance to cases where economic injury naturally flowed from defendant’s alleged conduct. Id. at 396. Irrespective of reliance, the District Court found that, after reviewing the record, many investors received the best available price when defendants executed their trades at the NBBO listed price. Id. (“The record as it is presently constituted requires the conclusion that in a large number of transactions there were no better prices from other sources.”). Drawing on the summary judgment record where it determined from a sample analysis of twelve trades executed by defendants that only one resulted in actual economic injury to a class representative, the District Court concluded that an undefined number of class members sustained no economic loss whatsoever, necessitating the conclusion that damages were not susceptible to class-wide proof. Id. at 396; see also In re Merrill Lynch, Sec. Litig., 911 F.Supp. at 766. Based on this reasoning, the District Court found the question of economic loss remained unique to each investor. Plaintiffs argue against, extrapolating the improbability of class-wide damages from twelve trades and contend the District Court erred in finding that “many” class members were uninjured. But we agree with the District Court’s finding that plaintiffs’ claims would require individual treatment to determine actual injury. In fraud-on-the-market or overcharging cases that warrant a presumption of reliance, plaintiffs satisfy their initial burden because they sustain economic loss by reason of the alleged conduct. In fraud-on-the-market cases, the price at which a stock is traded is presumably affected by the fraudulent information, thus- injuring every investor who trades in the security. In re Burlington Coat Factory, 114 F.3d at 1419 n. 8 (citing Basic Inc., 485 U.S. at 241-42, 108 S.Ct. 978). Nor was economic loss a question in those securities claims where defendants failed to disclose a fraudulent pricing policy that overcharged investors. Accordingly, presuming economic loss was the ineluctable by-product of the alleged fraud. The same does not hold true here. The execution of plaintiffs’ trades at the NBBO listed price did not necessarily injure each class member. Plaintiffs may be entitled to a presumption of economic loss only when it is clear each class member has in fact sustained economic injury. See Sem-erenko, 223 F.3d at 185. In a securities class action, a putative class may presumptively establish economic loss on a common basis only if the evidence adequately demonstrates some loss to each individual plaintiff. Because securities claims may take on several forms, proving economic loss on a common basis is a fact-specific inquiry. See EchoCath, 235 F.3d at 884; Grandon, 147 F.3d at 190; see also Bogosian, 561 F.2d at 454 (evaluating loss in antitrust class actions). We find no support in the case law for presuming economic injury for purposes of class certification in Rule 10b-5 claims absent indication that each plaintiff has suffered an economic loss. See Semerenko, 223 F.3d at 184-85 (“[W]here the claimed loss involves the purchase of a security at a price that is inflated due to an alleged misrepresentation, there is a sufficient causal nexus between the loss and the alleged misrepresentation to satisfy the loss causation requirement.”); see also Robbins, 116 F.3d at 1448 (“Our decisions explicitly require proof of a causal connection between the misrepresentation and the investment’s subsequent decline in value.”); Hayes v. Gross, 982 F.2d 104, 107 (3d Cir.1992) (injury assumed when security purchased at price inflated by fraudulent misrepresentation); Scattergood v. Perelman, 945 F.2d 618, 624 (3d Cir.1991) (same). In assessing the question of economic loss, it is important to bear in mind how the facts here differ from those in a typical securities action. Unlike a “fraud-on-the-market” claim, this case does not involve a misrepresentation or omission that decreased the value of a security. Furthermore, unlike excessive over-pricing policy claims, this case does not involve a practice that necessarily harmed investors across the class. See generally Grandon, 147 F.3d 184; Hoxworth II, 980 F.2d 912; Vining-Sparks, 959 F.2d 606; Angelastro, 764 F.2d 939; Ettinger, 122 F.R.D. 177. In this case, defendants allegedly executed trades solely at the NBBO price. Depending on the facts of each trade, the NBBO listed price may or may not have provided a class member with the best price. Therefore, economic loss to the plaintiffs cannot be presumed by the purchase or sale of a security at the NBBO price, and we will not presume it across the class. In sum, we conclude that the putative class would be entitled to a rebuttable presumption of reliance but not of economic loss. Therefore, their claims do not warrant a rebuttable presumption of class-wide injury. VI. Turning to the test for class certification, we must examine the elements of a Rule 10b-5 claim through the prism ofFed.R.Civ.P. 23 to determine whether the District Court abused its discretion in failing to certify the class. A putative class must satisfy the four conjunctive criteria of Fed.R.Civ.P. 23(a): numerósity, commonality, typicality, and adequacy of representation. A class seeking money damages must also satisfy the (b)(3) requirements of predominance and superiority-namely, whether common questions of law or fact ;predominate and whether the class action represents the superior method for adjudicating the case. Denying class certification, the District Court found that plaintiffs’ claims were atypical and the class representatives inadequate to represent the class. On related grounds, the court also held that common issues did not predominate and the class action device was neither superior nor manageable. Merrill Lynch, 191 F.R.D. at 397-98. As noted, we review the District Court's decision denying class certification for abuse of discretion. See supra p. 165. A. The certification requirements of Fed.R.Civ.P. 23(a) embrace two rudimentary principles: 1) the necessity and efficiency of adjudicating the claims as a class and 2) the assurance of protecting the interests of absentee members. Baby Neal v. Casey, 43 F.3d 48, 55 (3d Cir.1994); G.M. Trucks, 55 F.3d at 785. If the class does not satisfy each of the 23(a) criteria, the suit cannot be maintained as a class action. For this reason, we will address each criterion in turn. 1. Numerosity requires a finding that the putative class is “so numerous that joinder of all members is impracticable.” Fed. R.Civ.P. 23(a)(1). It is clear the size of putative class satisfies this criterion. There are hundreds of thousands of class members and joinder would be impracticable. Id.) Merrill Lynch, 191 F.R.D. at 394. 2. “ ‘The concepts of commonality and typicality are broadly defined and tend to merge,’ ” because they focus on similar aspects of the alleged claims. Barnes, 161 F.3d at 141 (quoting Baby Neal, 43 F.3d at 56). Commonality requires the presence of “questions of law or fact common to the class,” Fed.R.Civ.P. 23(a)(2), and typicality demands that “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” Fed. R.Civ.P. 23(a)(3). The significance of commonality is self-evident: it provides the necessary glue among class members to make adjudicating the case as a class worthwhile. 1 Herbert B. Newberg & Alba Conte, Newberg on Class Actions § 3.01, p. 3-4 (3d ed.1992). Typicality ensures the interests of the class and the class representatives are aligned “so that the latter will work to benefit the entire class through the pursuit of their own goals.” Barnes, 161 F.3d at 141. “The typicality criterion is intended to preclude certification of those cases where the legal theories of the named plaintiffs potentially conflict with those of the absentees by requiring that the common claims are comparably central to the claims of the named plaintiffs as to the claims of the absentees.” Baby Neal, 43 F.3d at 57 (citing Weiss v. York Hosp., 745 F.2d 786, 810 (3d Cir.1984)). We have set a low threshold for satisfying both requirements. See Barnes, 161 F.3d at 141 (noting claims based on common course of conduct satisfy typicality); In re Sch. Asbestos Litig., 789 F.2d 996, 1010 (3d Cir.1986) (highlighting that the “ ‘threshold of commonality is not high’ ”) (quoting Jenkins v. Raymark Indus., Inc., 782 F.2d 468, 472 (5th Cir.1986)). That is, “Rule 23(a) does not require that class members share every factual and legal predicate to meet the commonality and typicality standards.” G.M. Trucks, 55 F.3d at 817. “ ‘[Njeither of these requirements mandates that all putative class members share identical claims.’ ” Prudential, 148 F.3d at 311 (quoting Baby Neal, 43 F.3d at 56). Nevertheless, we require courts to examine them separately because the criteria remain distinct. Baby Neal, 43 F.3d at 56. a. As noted, commonality does not require an identity of claims or facts among class members. Prudential, 148 F.3d at 310 (citing Baby Neal, 43 F.3d at 56). “ ‘The commonality requirement will be satisfied if the named plaintiffs share at least one question of fact or law with the grievances of the prospective class.’ ” Id. (quoting Baby Neal, 43 F.3d at 56); Georgine v. Amchem Prods., Inc., 83 F.3d 610, 627 (3d Cir.1996), aff'd sub nom., Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). The District Court found, and it is not seriously contested on appeal, that common questions of law and fact are present. Merrill Lynch, 191 F.R.D. at 394. Whether the defendants’ execution of their customers’ trades at prices quoted on the NBBO violates Rule 10b-5 constitutes a factual and legal claim that is common to the entire class. In fact, plaintiffs’ claims raise several common issues including: 1) did defendants intentionally execute the plaintiffs’ orders at the NBBO price without examining other alternatives; 2) did defendants fail to disclose them practice in violation of their duty to their customers; 3) were defendants technologically capable of providing superior prices to those offered on the NBBO; and 4) did defendants’ conduct violate § 10(b) of the Securities Exchange Act of 1934. See Br. of Appellants at 31. The District Court properly held the putative class satisfied this requirement. b. The typicality inquiry here centers on whether “ ‘the named plaintiffs’] individual circumstances are markedly different or ... the legal theory upon which the claims are based differs from that upon which the claims of other class members will perforce be based.’ ” Eisenberg, 766 F.2d at 786 (quoting Weiss, 745 F.2d at 809 n. 36). The criterion acts as a bar to class certification only when “the legal theories of the named representatives potentially conflict with those of the absentees.” Georgine, 83 F.3d at 631. If the claims of the named plaintiffs and putative class members involve the same conduct by the defendant, typicality is established regardless of factual differences. Barnes, 161 F.3d at 141; see also 1 New-berg on Class Actions § 3.15, p. 3-78 (“Factual differences will not render a claim atypical if the claim arises from the same event or practice or course of conduct that gives rise to the claims of the class members, and if it is based on the same legal theory.”). Our jurisprudence “assures that a claim framed as a violative practice can support a class action embracing a variety of injuries so long as those injuries can all be linked to the practice.” Baby Neal, 43 F.3d at 63 (discussing Falcon, 457 U.S. 147, 102 S.Ct. 2364). As a result, we have concluded that the requirement “does not mandate that all putative class members share identical claims,” Banes, 161 F.3d at 141, because “ ‘even relatively pronounced factual differences will generally not preclude a finding of typicality where there is a strong similarity of legal theories’ or where the claim arises from the same practice or course of conduct.” Prudential, 148 F.3d at 311 (quoting Baby Neal, 43 F.3d at 58); Hoxworth II, 980 F.2d at 923. The District Court found that the different circumstances surrounding each trade over the class period rendered the claims of the named representatives “[a]typieal of those members of the huge class.” Merrill Lynch, 191 F.R.D. at 397. It reasoned that “[i]f proof of the representatives’ claims would not necessarily prove all the proposed class members!’] claims, the representatives!’] claims are not t