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WASHINGTON (AP) - A stringent legal standard is needed for shareholders to meet when they accuse public companies of fraud and sue them for damages, attorneys representing the government and business interests argued before the Supreme Court on Wednesday.
But in a case that brought to mind a series of corporate scandals in 2002, a lawyer representing public pension funds and 32 states and territories contended that it would be wrong to choke off shareholders' claims at the initial stage of their cases by applying the tougher standard prescribed by some federal appeals courts.
Congress intended in a 1995 law to curb abusive litigation against companies, said Harvard law professor Arthur Miller. But, he also told the justices, "Let's not throw the baby out with the bathwater."
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