In a unanimous decision authored by Chief Justice John Roberts, the US Supreme Court declined to overturn a past case which allowed investors to band together in a class action securities fraud suit and allege that fraud was responsible for an apparently inflated stock price, even if the specific investor is unable to show that he or she relied upon the fraudulent information when making investment decisions.
However, the court did say that corporations facing such suits should be able to present evidence that fraud wasn’t responsible for the drop in stock price at an earlier stage in the suit. Before the case, Halliburton Co. v. Erica. P. John Fund, companies could only present such evidence during the merits phase of the trial.
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The precedent in question, Basic Inc. v. Levinson, remains in effect. However, three of the Court’s more conservative justices, Clarence Thomas, Samuel Alito and Antonin Scalia, wrote that they would have overturned Basic.
The exact impact of the holding is impossible to fully predict. However, experts indicate that it will likely make class action cases much more combative.
If you live in the Orlando, Florida area or anywhere else in the country and you need an experienced securities fraud attorney, please contact Colling Gilbert Wright & Carter today for a free consultation.