No it's a Court decision
Court toughens threshold for securities class-action suits
12:36p ET June 21, 2007 (MarketWatch)
WASHINGTON (MarketWatch) -- The Supreme Court on Thursday ruled in favor of Tellabs Inc. in a class-action case, setting a tougher standard for investors pursuing lawsuits alleging that corporations engaged in securities fraud.
In an 8-1 ruling, the court said plaintiffs' attorneys must show when filing suit that corporate executives had a "cogent and compelling" intent to engage in wrongdoing. Courts must weigh other innocent explanations for conduct alleged in fraud suits, the court said in an opinion written by Justice Ruth Bader Ginsburg.
The decision vacates an appellate court ruling that had set a lower standard. The case now goes back to the lower court.
Tellabs , a telecommunications equipment maker, welcomed the decision.
"We are encouraged that the Supreme Court recognized that the Seventh Circuit's decision was incorrect," said James M. Sheehan, the company's general counsel. "The Supreme Court has also appropriately established a strict standard to be applied in sending the case back for further review."
Sheehan said Tellabs was confident the lawsuit would ultimately be found to be without merit.
The class-action lawsuit was filed in 2001 after a sharp plunge in Tellabs' revenue and stock price. Shareholders claimed that senior executives, including former Chief Executive Richard Notebaert, painted a falsely optimistic picture of sale trends.
Company executives, however, insisted they were taken by surprise by the sudden downturn, which afflicted the entire telecommunications sector after a high-tech bubble burst in early 2001. Tellabs has said that no executives benefited from the sharp swing in the company's hare price and that the suit never should have been allowed to proceed.
Pennies not a zero sum game as much as some zero game.
AI
