High Court Rules Against Investors in Fraud Case
The Supreme Court has struck a blow against investors devastated by stock crashes, ruling that they can't sue third parties involved in stock manipulation. Tuesday's decision heads off lawsuits worth possibly billions of dollars, including a class-action suit covering more than a million Enron shareholders.
In a case involving Charter Communications, the justices ruled there are severe limits on when investors can sue a third party that helps a company fraudulently inflate the value of its stock. Investors wanted to sue companies that conspired with Charter to make its advertising revenue look better than it was. Those third parties bought advertising with cash provided by Charter itself.
The Supreme Court ruled, 5-3, that investors can sue only Charter, because in buying stock they relied on statements made by Charter alone.
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