SCOTUS decision may affect market

The Supreme Court, in one of the most important securities law rulings in years, decided Tuesday that fraud claims are not allowed against third parties that did not directly mislead investors but were business partners with those who did. The 5-3 ruling came in Stoneridge Investment Partners v. Scientific-Atlanta (06-43).

from the SCOTUSblog.

While the specifics of the case get a little complicated (think chain letter involving millions of dollars and accounting fraud), the takeaway is that investors and invesment vehicles may not sue corporations who are not directly involved in securities fraud (directly means making explicit statements about the investment and/or soliciting investors). This shuts the door on a number of lawsuits filed against banks and other corporations in the wake of the Enron scandal, and is generally going to be seen as a good sign in the business community. The debate continues as to whether the ruling adversely affects the little guy, however... For SCOTUS fans, try to predict which justices voted which way in the 5-3 decision (hint, Justice Breyer recused himself for reputedly having a financial conflict of interest).