Supreme Court Decides 2 Securities Fraud Cases.

Other news about fraud publish in the NEW YORK TIME

 WASHINGTON — In a pair of securities fraud decisions issued Wednesday, the Supreme Court ruled for investors seeking to band together in a class-action lawsuit and imposed a strict time limit on some suits filed by the Securities and Exchange Commission. 

The class action case, Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, No. 11-1085, was a kind of sequel to the court’s 2011 decision in Wal-Mart Stores v. Dukes, which threw out an enormous employment discrimination class action on the ground that the plaintiffs did not have enough in common to pursue their claims in a single lawsuit.

The question in the new case was whether plaintiffs in securities fraud cases should be required to prove that the defendant had made a material misstatement before a class action may be certified. Material information, the court has explained, is the sort of thing that reasonable investors would believe significantly alters the total mix of available information.

But the court has also said that materiality may be presumed when a company makes public statements in an efficient securities market, or a market that reflects all publicly available information about a company. That presumption is known as the “fraud on the market” theory.

The case decided Wednesday arose from statements made by Amgen, a drug company, about the safety of two drugs that stimulate red blood cell production, reducing the need for transfusions. The plaintiffs asserted that those statements were materially false and had inflated the company’s stock price.

Justice Ruth Bader Ginsburg, writing for the majority in the 6-to-3 decision, said the plaintiffs’ assertion was enough for purposes of class certification because the question at that stage was merely whether, in the words of the relevant rule of civil procedure, “questions of law or fact common to class members predominate over any questions affecting only individual members.”

Justice Ginsburg wrote that the question of materiality, whatever its eventual answer, was a common one.

“The class is entirely cohesive: it will prevail or fail in unison,” she wrote. “In no event will the individual circumstances of particular class members bear on the inquiry.”

Chief Justice John G. Roberts Jr. and Justices Stephen G. Breyer, Samuel A. Alito Jr., Sonia Sotomayor and Elena Kagan joined the majority opinion. In a concurrence, Justice Alito said that it may be time to reconsider the fraud-on-the-market theory in light of research suggesting that it may sometimes rest on a faulty premise.

Justice Clarence Thomas, joined by Justice Anthony M. Kennedy and in part by Justice Antonin Scalia, dissented. Justice Thomas agreed that the theory was questionable and added that materiality must be shown at the certification stage.

Justice Scalia, in a separate dissent, said that “certification of the class is often, if not usually, the prelude to a substantial settlement by the defendant because the costs and risks of litigating further are so high.” Allowing plaintiffs to obtain class certification without showing that the asserted misstatement was material, he said, is “unquestionably disastrous.”