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Supreme Court takes on pension fund-led case on securities fraud over filing omissions

The U.S. Supreme Court on Monday said it would hear an appeal of a case filed by the Indiana Public Retirement System, Indianapolis, and five other pension funds that claim a firm in which they invested omitted information on a kickback and overbilling scheme involving its former employees.

The appeal to the Supreme Court was filed by Leidos, a security and engineering firm, which has sought to dismiss an earlier federal court ruling in the pension funds' favor; the 2nd U.S. Circuit Court of Appeals in New York in March 2016 refused to overturn the ruling, according to court documents.

Leidos was accused of violating Securities and Exchange Commission securities fraud rules over omissions in shareholder filings that were allegedly misleading. Leidos claims the ruling of the appeals court in New York differs from separate earlier rulings by three other U.S. appeals courts that companies aren't liable to private litigants for the contents of such forward-looking statements.

Leidos claimed it “faces potential liability” for an alleged violation “that it would not be facing had this suit been filed in a different jurisdiction,” according to court documents filed with the Supreme Court.

The original lawsuit claimed Leidos, then operating as SAIC, in 2011 omitted information to shareholders about a kickback scheme involving the company's former employees and New York City.

The $31 billion INPRS is lead plaintiff in the case. Other pension funds involved include the $156 million Westland (Mich.) Police and Fire Retirement System and the $90 million Electrical Workers Pension Trust Fund of IBEW Local Union No. 58, Madison Heights, Mich.

The Supreme Court will hear the case during its fall 2017 session.