Posted on 06 Jun 2011
Siding with shareholders who are suing Halliburton Co., the U.S. Supreme Court made it easier for investors in some states to press securities fraud suits.
The justices unanimously said the shareholders can sue as a group without first establishing that they lost money as a result of the alleged fraud.
The shareholders, led by the Erica P. John Fund, contend that Halliburton from 1999 to 2001 falsified earnings reports, played down estimated asbestos liability and overstated the benefits of a merger. The company was led during part of that period by Dick Cheney, later the U.S. vice president.
The high court case concerned the standard that applies at the so-called class certification stage, not at final judgment. The Supreme Court ruled in 2005 that, to recover damages, shareholders ultimately must show a direct connection between a misrepresentation and a decline in stock prices.
Lower courts had been divided on the issue. In the Halliburton case, a federal appeals court had ruled that the investors couldn’t sue.