The Supreme Court decided Friday to hear an appeal from Halliburton that could make it more difficult for shareholders to sue companies for engaging in fraud to prop up stock prices.
The high court agreed to hear the company’s attempt to stop legal action from shareholders who bought stock between June 1999 and December 2001.
Their lawsuit argues that Halliburton deliberately understated the company’s liability in asbestos litigation, inflated how much money its construction and engineering units would bring in, and overstated the benefits of a merger with Dresser Industries. When Halliburton made corrective disclosures, the stock price dropped, causing investors to lose money, the lawsuit says.
This is the second time the case has been to the Supreme Court. The U.S. Court of Appeals for the 5th Circuit, based in New Orleans, originally refused to let the lawsuit go forward as a class action. But the Supreme Court said in 2011 that that ruling was incorrect, and the lawsuit was certified as a class-action suit by the lower courts.
Now Halliburton’s attorneys want the Supreme Court to throw out its 1988 decision in
Basic v. Levinson, which the shareholders’ attorneys call “the cornerstone for modern private securities litigation.” That decision says shareholders do not have to prove that they relied on a company’s misrepresentation in order to obtain class certification, meaning that judges can assume that misrepresentations by corporations were taken into account by shareholders when they bought the stock.
Halliburton attorneys said that should be overruled or modified to say plaintiffs must prove that the alleged misrepresentations distorted the stock’s market price. A decision upholding that theory would make it harder for shareholders to band together in class-action lawsuits to sue corporations in securities cases.
— Associated Press
● General Electric will spin off its credit card business next year into a separately traded company, selling as much 20 percent of its North American consumer lending business in an initial public offering in 2014. The IPO will be the first step toward an exit from retail finance operations, which will be completed in 2015 with a tax-free stock distribution to GE shareholders, the company said Friday in a regulatory filing. The unit makes credit card loans. The cards are usually offered through retailers such as J.C. Penney and Wal-Mart and carry those retailers’ brands.
● Caterpillar said Friday that it will close another plant and lay off 240 workers as it continues to respond to a sharp drop in demand for its earth-moving products from customers in the mining industry. The planned shutdown of the Pulaski, Va., facility, which makes coal haulers and other equipment, is expected to be completed by the middle of next year.
● Hyundai Motor will launch new versions of its Sonata and Genesis sedans and a hydrogen-fueled Tucson crossover in the United States in the first half of next year, the South Korean automaker’s top U.S. official said Friday. Hyundai is expected to unveil the Tucson fuel-cell vehicle, which is already sold in Europe as the ix35, next week at the Los Angeles auto show, Hyundai Motor America chief executive John Krafcik said at the company’s technical center outside Detroit. Hyundai sees fuel-cell cars as combining the best attributes of gasoline-powered cars and electric vehicles, including greater driving range than electric cars with a faster time to recharge the vehicle’s battery.
● Butterball, the nation’s largest turkey producer, said it was facing a shortage of fresh large birds just weeks before Thanksgiving. Company spokeswoman Stephanie Llorente said its poultry had trouble gaining weight on some of its farms but did not explain why. Butterball still has an ample supply of its frozen large varieties, which are birds 16 pounds and heavier. Based in Garner, N.C., Butterball produces 1 billion pounds of turkey every year, equal to 20 percent of the nation’s production.
● Futures exchange company CME Group said it was the victim of a cyberattack in July through its ClearPort system, a software platform where over-the-counter trading of commodities and currencies is reported. On an average trading day, 450,000 contracts pass through ClearPort. The Chicago-based company said only ClearPort customers’ information was compromised and the breach did not affect trading or any of the CME Group’s other clearing systems.
— From news services