Below is the first part of an article by Ellen Rosen from businessweek.com. It reads…
The U.S. Supreme Court limited shareholder class actions, stopping short of abolishing such cases altogether, in a case involving Halliburton Co. (HAL:US)
The Houston-based energy and engineering company, supported by business groups, asked the high court to overturn a 1988 precedent establishing “fraud on the market” as a theory that supported — and ignited — shareholder class actions. A divided court yesterday refused to overturn the opinion in Basic v. Levinson, with Chief Justice John Roberts saying Halliburton hadn’t shown “the kind of fundamental shift in economic theory” that would warrant casting aside the precedent.
The court instead gave defendants a new tool to stop shareholder suits early 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 securities litigation.