Setting the tone for a wave of suits looming on the horizon, the U.S. Supreme Court this week deliberated on some of the issues related to retirement plan investors who have tried to sue for lower-than-promised returns and alleged market manipulations.
On Monday, justices addressed the merits of a class-action suit launched by the multi-billion-dollar Connecticut public employee retirement system against Amgen Inc., a Thousand Oaks, Calif.-based biotechnology firm.
The pension fund and other investors have taken aim at Amgen, claiming that the company witheld information regarding the safety of two of its new medications, and that once the information was revealed, stock prices plummeted.
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Both of California's major public employee and teacher retirement systems have filed briefs in support of the suit.
Lower courts in California refused to address Amgen's rebuttal of the claims, so the Supreme Court has been asked to clarify whether the subject of a class-action suit is required to prove that any alleged misstatements were designed to cause harm, and would subsequently result in material impact on the pricing of the company stock.
While several justices said the proof of harm is more appropriately stated after a class is certified, Justice Scalia said that proving material harm is infinitely more important in the early stages, as certification of a class suit is usually a one-way ticket to seeking a settlement.
Lawyers speaking on behalf of investors say they believe the requirement for more proof at the certification stage would essentially mean the case was being tried before the trial itself.
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