Justices rule against investors in important securities fraud case

WASHINGTON -- The Supreme Court today curbed investor lawsuits against businesses accused of scheming to inflate stock prices.

In a 5-3 ruling, the court gave a measure of protection from securities suits to suppliers, banks, accountants and law firms that do business with publicly traded companies.

The court ruled against investors who accused two suppliers of colluding with Charter Communications Inc. to deceive Charter's stockholders and manipulate the price of the cable TV company's stock.

Charter investors do not have the right to sue because they did not rely on the deceptive acts of Charter's suppliers, said the majority opinion by Justice Anthony Kennedy.

The decision is likely to have an impact on a similar class-action lawsuit by shareholders who invested in scandal-ridden Enron Corp.

Investors in Enron, once the nation's seventh-largest company, are seeking more than $30 billion from Wall Street investment banks, alleging they schemed with Enron to hide its financial problems.

In the Supreme Court, the lawsuit against Charter's suppliers has been closely watched by business and industry, which argued that an adverse ruling would clear the way for a flood of lawsuits.