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Supreme Court Returns Securities Case Brought by California Teachers' Retirement System

The U.S. Supreme Court today ordered a federal appeals court to reexamine a securities-fraud case in which the California State Teachers' Retirement System is the lead plaintiff.

In a brief order, the justices told the U.S. Court of Appeals for the 9th Circuit, in San Francisco, to restudy the California case in light of their decision last week in Stoneridge Investment Partners LLC v. Scientific-Atlanta Inc. In that case, the court ruled that federal securities law does not allow fraud claims against third parties who did not directly mislead investors, even if they were business partners of companies that did so.

I reported on the Stoneridge case in the School Law Blog here because it had drawn friend-of-the-court briefs from several teacher-retirement systems, including the California system.

The case sent back for reconsideration today was Avis Budget Group Inc. v. California State Teachers' Retirement System (Case No. 06-43). That case concerned an alleged scheme to commit securities fraud by overstating the revenues of Homestore.com, an Internet real estate company. The 9th Circuit's original ruling in the case last June is here.

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