Eric W. Dolan
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.
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.
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