The US Supreme Court’s hearing of Makor v Tellabs – which will test the standard investors must meet to get allegations of securities fraud to court – could result in “nearly insurmountable” barriers to investors recouping fraud losses should the decision favour the defendants, public pension advocate NCPERS and lawyers’ group NASCAT warned.
The case is being brought by shareholders in Tellabs, a supplier to the telecommunications industry, and the defendants are accused of concealing from investors the company’s slowdown in sales from mid-2000 to mid-2001.
NCPERS and NASCAT noted with particular concern the filing of a “friend of the Court” brief favouring the defendants by the US Securities and Exchange Commission and the US Department of Justice.
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