BusinessCompany NewsUS court backs shareholder ruling in fraud cases

US court backs shareholder ruling in fraud cases

US ruling maintains shareholders have burden of proof in litigation

A US Supreme Court has backed an 11-year-old law which maintains that
shareholders have the burden of proof in bringing cases of corporate fraud to
court.

The decision was handed down in the High Court yesterday in an 8-to-1
decision, which upheld the law obliging shareholders to successfully prove that
a company intentionally misled its shareholders.

The decision said that shareholders must present the court with a ‘cogent and
compelling’ set of facts.

The court did acknowledge that personal economic gain is a compelling part of
a fraud case, necessary to prove that a company and its officers intended to
defraud shareholders.

The new ruling, based on the Private Securities Litigation Reform Act (PSLRA)
of 1995, may not step the tide of shareholder litigation cases, but may give
shareholders a more accurate idea of what is necessary to pursue litigation
successfully.

Further reading:


Shareholder
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