Supreme Court Rules Against Investors in Securities Fraud Case

By: Associated Press
By: Associated Press

SUPREME COURT -- A setback Tuesday for investors seeking to sue businesses for scheming to manipulate stock prices of publicly traded companies.

In a 5-3 ruling, the Supreme Court gave a measure of protection from securities suits to suppliers, banks, accountants and law firms that do business with corporations engaging in securities fraud.

The court ruled against investors who claimed that two suppliers schemed with Charter Communications to deceive stockholders and inflate the price of the cable TV company's stock.

The majority opinion by Justice Anthony Kennedy held that Charter investors do not have the right to sue because they did not rely on the deceptive acts of Charter's suppliers.

The decision is likely to have an impact on a similar class-action lawsuit by shareholders who invested in scandal-ridden Enron.

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