From Business Week
The U.S. Supreme Court tightened the limits on class-action lawsuits by shareholders, giving a partial victory to Halliburton Co. while stopping short of abolishing those suits altogether.
Halliburton and business groups had sought to overturn a 1988 precedent and effectively end class-action fraud suits over securities bought on public exchanges. A divided court today refused, with Chief Justice John Roberts saying Halliburton hadn’t shown “the kind of fundamental shift in economic theory” that would warrant overruling the precedent.
The court instead made it easier for defendants to prevent approval of a class action, a certification that can ratchet up the pressure on a company to settle. Roberts said a defendant can block a class action by showing that an alleged misstatement didn’t affect a company’s stock price.
The ruling will “weed out some of the weaker cases,” said Larry Hamermesh, a Widener University law professor who teaches about securities litigation.
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