The U.S. Supreme Court heard arguments in a case that could determine the ability of defrauded investors to sue third parties in an accounting fraud case, including a company's outside auditors, advisors and lawyers.
The case, Stoneridge Investment Partners LLC v. Scientific-Atlanta Inc. and Motorola Inc., involves cable TV provider Charter Communications, which had an agreement with two set-top-box makers, Motorola and Scientific-Atlanta, now owned by Cisco Systems. Charter overpaid for the boxes by $20 each, or about $17 million total, but claimed the extra money went for advertisements from the equipment makers. The company was thereby able to pump up its revenue to meet earnings expectations.
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