Handing technology companies and others a huge victory in their running battle with plaintiffs attorneys, the Ninth Circuit U.S. Court of Appeals on Friday made it much more difficult for disgruntled shareholders to sue corporations when their stock drops.
The divided court ruled that in order to sue for stock fraud, plaintiffs must show that corporate officers were “deliberately reckless” in making optimistic financial forecasts that turned out to be severely wrong. The opinion Friday was the most defense-friendly interpretation yet of the 1995 Private Securities Litigation Reform Act.
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