U.S. SC agrees to hear securities class action litigation

WASHINGTON (Legal Newsline) -- The U.S. Supreme Court has agreed to hear a case that business groups argue challenges a key precedent in securities class action cases. On Friday, the nation's high court agreed to review Halliburton Co. v. Erica P. John Fund Inc., according to a single-page order list. Halliburton allegedly made misrepresentations concerning its accounting practices, the projected efficiencies of a merger and its projected asbestos liability. The plaintiffs claim that Halliburton's stock dropped in price when the truth regarding these alleged misrepresentations was revealed, and sued as a putative class in 2002. Last month, the U.S. Chamber of Commerce and the National Association for Manufacturers filed an amicus brief in support of the petitioners. The two groups noted they have a "keen interest" in the case because private securities class action litigation puts a burden on American businesses and adversely affects access to capital markets. The Chamber's Institute for Legal Reform owns Legal Newsline. DRI: The Voice of the Defense Bar also filed an amicus brief in support of the petitioners. The case involves the "fraud on the market" theory of liability in securities class actions. The theory has greatly facilitated securities class actions and has contributed to their exponential growth since the late 1980s, the Chamber and NAM argue. Linda Kelly, NAM's senior vice president and general counsel, said late Friday manufacturers are pleased with the court's decision to hear the case. "These lawsuits not only siphon productive capital out of the economy, they inflict significant cost burdens on manufacturers, while impairing their ability to grow and create jobs," she said. "We look forward to the court's review of this crucial issue." From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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