On October 4, 2010, the U.S. Supreme Court signaled its interest in an appeal by shareholders trying to sue Halliburton Co. for securities fraud by seeking the U.S. Solicitor General’s advice on Erica P. John Fund, Inc. v. Halliburton Co. et al., No. 09-1403. Should the Court grant certiorari in Erica P. John Fund, it will consider the Fifth Circuit’s class certification standard, which differs from other circuits’ standards. The key issue will involve the role of proving causation as part of the class certification decision.
Plaintiff in the case below, Archdiocese of Milwaukee Supporting Fund, Inc. v. Halliburton Co., 597 F.3d 330 (5th Cir. 2010), filed a putative securities class action in 2002 against Halliburton and David Lesar (Halliburton’s CEO during the alleged class period, 1999-2001), alleging defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by deliberately falsifying financial results and misleading the public about its financial information. According to the allegations, defendants made false statements concerning (1) Halliburton’s potential liability in asbestos litigation, (2) Halliburton’s accounting for revenue in its engineering and construction business, and (3) the benefits to Halliburton of a merger with Dresser Industries.
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