Arab Today, arab today us high court curbs shareholder classaction suits
Last Updated : GMT 10:46:35
Arab Today, arab today
Arab Today, arab today

US high court curbs shareholder class-action suits

Arab Today, arab today

Arab Today, arab today US high court curbs shareholder class-action suits

The US supreme court
Washington - AFP

The US Supreme Court awarded a partial victory to oil services giant Halliburton by making it harder for shareholders to file a class-action lawsuit over claims of securities fraud.
But the high court stopped short of reversing its key 1988 ruling which allows such collective complaints if there is even a presumption of fraud.
Halliburton had sought the dismissal of a case brought by a group of investors who claimed they lost money when Halliburton's shares plunged, accusing the company of erroneous earnings reports.
The company also had sought unsuccessfully for the nine justices to overturn "Basic v. Levinson," the 1988 ruling in which the court set the precedent that investors in a class action suit need not show a direct link between their losses and a company's alleged misinformation.
The Supreme Court, known for a gentle approach to the business community, dismissed the class action suit but declined to overturn its 1988 ruling.
"Halliburton has not shown a 'special justification' for overruling Basic's presumption of reliance," Chief Justice John Roberts wrote in the unanimous opinion.
"The court agrees with Halliburton however that defendants must be afforded an opportunity to rebut the presumption of reliance (on misinformation) before class certification with evidence of a lack of price impact," he added.
In other words, the court allows firms accused of market fraud to include evidence, in early stages of a complaint, that alleged misrepresentations did not affect the company's stock price.
Companies fighting securities fraud lawsuits traditionally are not allowed to make such arguments about stock price until later in the legal process.
Class-action lawsuits in general are far more difficult to fight than individual cases.
According to corporate law organization Law360, the decision "will likely make it somewhat more difficult for plaintiffs to bring securities class actions, but it stopped short of closing a major door."
The Supreme Court, led by George W. Bush appointee Roberts, has not shown favor to class-action suits.
In 2011, it rejected a suit by 1.5 million workers claiming discrimination at retail giant Walmart, and then in 2012 did the same with customers of Comcast angry about rate hikes.

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Arab Today, arab today us high court curbs shareholder classaction suits Arab Today, arab today us high court curbs shareholder classaction suits

 



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