The Supreme Court's new term includes cases challenging investors' burden of proof in securities litigation and whether 401(k) plan fiduciaries can be sued for investment choices made years earlier.
Almost of as much interest to large institutional investors and their lawyers is the court's decision — just days before scheduled arguments — to not hear a securities class-action case testing the time limits for plaintiffs to join such lawsuits.
Questions about fiduciary duty will be answered after the court hears arguments next year in Tibble et al. vs. Edison International et al., but also could come up in another case that the court has been petitioned to accept, Tussey et al vs. ABB Inc. et al.
The securities case, Omnicare Inc. vs. Laborers District Council Construction Industry Pension Fund et al., will be heard first, with arguments scheduled for Nov. 3.
After reaching settlements resolving allegations of kickbacks, the pharmaceutical services firm was sued by the pension fund, which claimed Omnicare misled investors in its registration statement for an initial public offering. Since then, lower courts have disagreed on whether such statements are challengeable facts or simply subjective opinions, and how much more investors seeking damages would have to prove.
Omnicare's court filing “has proposed a rule that would effectively immunize (securities) issuers from liability,” said Blair Nicholas, San Diego-based managing partner at securities litigation firm Bernstein Litowitz Berger & Grossmann LLP. Mr. Nicholas is one of the lawyers who filed an amicus brief on behalf of 40 U.S. and foreign public pension funds representing $2 trillion in combined assets. “The integrity of the offering process and federal securities law would effectively be eviscerated,” he said. “Public pension plans rely on the veracity of the statements, and opinions of material facts make up a significant portion” of such statements.
The presence of several foreign pension fund interests, including Royal Mail Group's £3.3 billion ($5.34 billion) pension fund and APG Asset Management, which oversees the e325 billion ($417.49 billion) assets of the ABP pension fund, Heerlen, Netherlands, on the amicus brief “really shows how important it is to foreign investors who rely on the opinions in the registration statement when investing in the U.S.,” said Mr. Nicholas.