Hartley Bernstein, a leading New York-based securities attorney, is warning investors that a recent U.S. Supreme Court decision may chill class action lawsuits against corporate executives.
June 23, 2007 (Press Release) --
Hartley Bernstein, a leading New York securities attorney, warns that a recent U.S. Supreme Court decision will have a "disturbing chilling effect on investors who may have been victimized by corporate fraud or stock scams."
Hartley Bernstein was commenting on the Supreme Court's rejection of an investor suit against Tellabs, a telecommunications equipment manufacturer. In an 8-1 decision the Supreme Court ruled that investors must show that corporate executives had a "cogent and compelling" intent to engage in misconduct. The Court rejected a lower court decision that held cases should go to trial if "a reasonable person could infer that the defendant acted with the required intent."
The Supreme Court ruling was a "body blow to investors," Mr. Bernstein said.
Hartley Bernstein, whose law practice is based in New York, is the founder of StockPatrol.com, widely recognized as a leading watchdog for investors. "The decision represents an unqualified victory for corporate lobbyists and their legislative supporters who have been fighting to limit the ability of investors to file class actions charging corporate fraud and challenging securities fraud." There is a "real danger," Bernstein said, that investors will no longer challenge corporate conduct unless they have evidence of a "smoking gun."
Bernstein also expressed concern that some plaintiff's class action lawyers, who work on a contingent-fee basis, "will discourage clients or shy away from litigation, even where there is credible evidence of corporate misconduct, because the Supreme Court has raised the bar for success."
Mr. Bernstein agreed that there is no place for a glut of frivolous lawsuits. "Not every failing company has been victimized by executive misconduct. Not every corporate leader is consciously steering the ship toward the iceberg," he said. "But, investors should remain vigilant," Bernstein insisted, "and must remain alert for signs that executives did have the requisite intent." Where that evidence exists, corporations and their executives must continue to be held accountable.
Hartley Bernstein was commenting on the Supreme Court's rejection of an investor suit against Tellabs, a telecommunications equipment manufacturer. In an 8-1 decision the Supreme Court ruled that investors must show that corporate executives had a "cogent and compelling" intent to engage in misconduct. The Court rejected a lower court decision that held cases should go to trial if "a reasonable person could infer that the defendant acted with the required intent."
The Supreme Court ruling was a "body blow to investors," Mr. Bernstein said.
Hartley Bernstein, whose law practice is based in New York, is the founder of StockPatrol.com, widely recognized as a leading watchdog for investors. "The decision represents an unqualified victory for corporate lobbyists and their legislative supporters who have been fighting to limit the ability of investors to file class actions charging corporate fraud and challenging securities fraud." There is a "real danger," Bernstein said, that investors will no longer challenge corporate conduct unless they have evidence of a "smoking gun."
Bernstein also expressed concern that some plaintiff's class action lawyers, who work on a contingent-fee basis, "will discourage clients or shy away from litigation, even where there is credible evidence of corporate misconduct, because the Supreme Court has raised the bar for success."
Mr. Bernstein agreed that there is no place for a glut of frivolous lawsuits. "Not every failing company has been victimized by executive misconduct. Not every corporate leader is consciously steering the ship toward the iceberg," he said. "But, investors should remain vigilant," Bernstein insisted, "and must remain alert for signs that executives did have the requisite intent." Where that evidence exists, corporations and their executives must continue to be held accountable.
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