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Supreme Court Gives Halliburton Partial Victory In Securities Fraud Case

The 9-0 ruling makes it tougher for plaintiffs to bring class-action suits.


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In a unanimous decision, the Supreme Court said companies should have a chance at the early stages of a lawsuit to show that any alleged fraud was not responsible for a drop in the company’s stock price.

The ruling is a partial victory for Houston-based Halliburton, which is trying to block a class-action lawsuit, claiming the energy services company inflated the price of its stock.

“This is actually Halliburton’s second trip to the Supreme Court, and so the lower courts will get another shot at this,” says Teddy Rave, an expert on constitutional law at the University of Houston Law Center. “What’s going to happen is Halliburton will have an opportunity now to present evidence to the trial court that the statements that it made had no impact on the price of its stock, and therefore, the class of plaintiffs could not have relied on those statements just by buying or selling their stock at a certain price.”

The ruling is also a modest win for business groups that hoped to make it more difficult for plaintiffs to bring class-action cases. But the High Court rejected Halliburton’s request to overturn a quarter-century-old precedent that has made it easier for plaintiffs to negotiate billions of dollars in legal settlements.