High Court Raises Bar for Investors' Suits

Companies trump shareholders for second time in a week
By M. Morris,  Newser Staff
Posted Jun 21, 2007 3:14 PM CDT
Tellabs Profits Plunge 96 Percent, Jobs Cut   (Getty Images)
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(Newser) – Investors who accuse companies of fraud based on executives' misdeeds must show that they acted intentionally, the Supreme Court ruled today, making it easier for corporations to have shareholder lawsuits dismissed. The decision helps protect companies against frivolous suits by clarifying a 1995 law, the Times reports, but critics say the existing limits are sufficient.

The decision, the second this week to go against investors, concerns Tellabs, a telecom company whose executives made misleadingly optimistic statements about the firm's prospects. In other decisions, the justices made it more difficult for federal prisoners to challenge sentencing guidelines and unanimously ruled against a high school football coach who claimed limits on recruiting infringed his free-speech rights.