In Halliburton case, Supreme Court may sanction corporations lying to investors

[avaistheone1]

Source: Raw Story

The Supreme Court's decision in the upcoming case Erica P. John Fund Inc v. Halliburton could prevent companies that deceive their investors from being held accountable, according to Jeff McCord of The Investor Advocate.

In early January, the Supreme Court agreed to review a US appeals court ruling that denied a group of investors could sue energy giant Halliburton in a broad class action. The lawsuit was filed in federal court in 2007 by Halliburton shareholders who bought stock between June 1999 and December 2001.

The investors claimed that Halliburton and Chief Executive Officer David Lesar falsely inflated the company's stock prices by overstating revenues in its construction business, along with inflating the benefits of its merger with Dresser Industries. Eventually the company disclosed that it had overstated its revenues and its stock prices consequentially fell, causing a loss to the stockholders.

Read more: http://www.rawstory.com/rs/2011/01/supreme-court-decision-halliburton-lawsuit-hinder-fraud-cases/

[Kolesar]

1. #1 reason not to invest in the US stock market

There was a time when the Security and Exchange Commission made the US stock market the best place to invest. It has become that the US has no advantage over other countries.

The capital will "flow" to other markets in other countries. Another kick in the head.

[girl gone mad]

4. Shareholders have few rights..

and they certainly are not a top consideration for management, despite the cliche. Executives are more concerned with their own options and how they can leverage assets and debt and cook the books to reap huge payouts.

The #2 and #3 reasons I avoid US stocks - net outflows for the past few years and insider selling is now at 2800 to 1 or some-such absurd ratio, yet the market moves magically higher. It's a house built on sand.

[Kolesar]

2. oops

dupes

[elleng]

3. Don't know why he said

'could prevent companies that deceive their investors from being held accountable, according to Jeff McCord.' Be afraid, be very afraid???

They COULD do ANYTHING, including sanctioning bad-actors. This appears to be a 'procedural' decision, about use of class action, and not on the merits.

[No Elephants]

6. Premise is that the decision could, as a PRACTICAL matter, keep stockholders from suing

"The investors claimed that Halliburton and Chief Executive Officer David Lesar falsely inflated the company's stock prices by overstating revenues in its construction business, along with inflating the benefits of its merger with Dresser Industries. Eventually the company disclosed that it had overstated its revenues and its stock prices consequentially fell, causing a loss to the stockholders.

The US Court of Appeals for the Fifth Circuit ruled that the shareholders could not band together as a class action unless they proved the various misrepresentations caused the stock price to fall. The court's decision was appealed by the shareholders.


"These shareholders, who have already lost money due to demonstrable misrepresentations of Halliburton's financial condition by management, which in-and of-itself is illegal, are being told they must spend more money to hire high priced consulting economists and/or forensic accountants before they are able to take advantage of rules that provide for payment of such costs by the entire class of investors, should they their case succeed," McCord explained."

<snip>


"If allowed to stand, the Fifth Circuit’s 'Catch-22' barrier to investors' pursuit of valid fraud claims, the federal civil justice system doors will be locked for the tens of thousands of defrauded investor who cannot on their own afford to hire high-priced experts to essentially prove their case before they even enter court," McCord warned."

It is not strictly a class acion decision in that it would seem that a single stockholder suing on his/her/its own would have to prove the same thing, if the SCOTUS upholds the 5th Cir.

[Doctor_J]

5. This SCOTUS?

Protect little people from banksters?

:rofl:

[StarsInHerHair]

7. maybe if someone tells the TP about this they'll actually protest something

the Left can agree is truly awful? The press always seems to cover them, so...

[underpants]

8. Wow imagine if Sarbanes Oxley was actually enforced

just imagine