High Court Imposes Stricter Standards on Shareholder Suits

By a vote of 8-1, the Supreme Court tightened the rules on shareholder lawsuits, thereby making it tougher for plaintiffs to recover their losses from companies accused of financial wrongdoing. Writing for the opinion, Justice Ruth Bader Ginsburg said a shareholder suit would be allowed to proceed only if the facts in the case are "cogent and compelling," in their intention to deceive stakeholders. The high court ruling comes as a result of a shareholder suit filed against technology concern Tellabs Inc. of Illinois. The suit charged that the high-tech company engaged in a fraudulent plan to artificially inflate the stock price and accused the chief executive of misleading investors about a high demand for the company's products.

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