But the unanimous ruling was only a modest step. It stopped short of tossing out a quarter-century-old legal theory that might have ended securities class action lawsuits altogether.
Writing for the court, Chief Justice
The change is expected to make it more expensive and time consuming for plaintiffs at the early stages of litigation. That gives corporations a better chance to mount a defense and could discourage lawyers from bringing weaker securities cases.
The decision is a victory for business groups that complain the growth of such class actions is a drain on corporate profits and a windfall for plaintiff lawyers. Investor groups say the lawsuits help deter corporate fraud and abuse.
The ruling is a partial victory for
Under Basic's "fraud on the market" theory, shareholders who claim fraud don't need to show they actually relied on specific false statements. The theory presumes a company's false statements inflated its stock price.
Business groups including the
The case involves a group of investors who claimed they lost money when
While the court's judgment was unanimous, Justice
The case is
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