BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.
To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.
To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.
WASHINGTON--Investors cannot sue attorneys, accountants and other third parties that aided and abetted a publicly traded company in a securities fraud scheme that led to substantial investor losses, the U.S. Supreme Court ruled Tuesday.
The case has been closely watched because of its affect on a lawsuit that Enron Corp. investors brought against a group of investment banks seeking to recover $33 billion from the banks for allegedly helping Enron deceive investors before the company's 2001 collapse.
The high court's 5-3 ruling, which upholds decisions by a federal trial court and an appellate court, came in Stoneridge Investment Partners L.L.C. vs. Scientific-Atlanta Inc; Motorola Inc. The case involves losses sustained by investors in cable television and Internet service provider Charter Communications Inc. of St. Louis.
Charter's investors sued two of the company's business partners, alleging that they participated in a scheme designed to help Charter conceal its disappointing financial results in 2000. In the alleged scheme, Charter paid suppliers Scientific-Atlantic and Motorola $17 million more than they were owed by contract for cable TV boxes they produced for Charter. The companies then paid Charter $17 million in new advertising fees. In accounting for the transaction, Charter inflated its revenues by spreading out the overpayment to its suppliers over time but immediately booking the advertising fees as new revenues, the investors allege.
When that deal and others were uncovered, Charter was forced to restate its results from 2000 through 2002, which reduced its revenue by about $292 million. The restatements triggered a dramatic drop in Charter's share price.
In its ruling, written by Justice Anthony Kennedy, the Supreme Court agreed with the two lower courts that Scientific-Atlantic and Motorola could not be held liable for the Charter investors' losses, because the plaintiffs did not rely upon any statements or representations made by the defendants.
"It was Charter, not (the defendants), that misled its auditor and filed fraudulent financial statements; nothing (the defendants) did made it necessary or inevitable for Charter to record the transactions as it did," Justice Kennedy wrote.