Dealing with US companies could damage your wealth

The Econmist this week has reported on what it describes as "the most important securities-litigation case for a generation" that has gone before the US Supreme Court.

The case involves a cable company that used a transaction with two suppliers to inflate its' revenues. Shareholders are suing the company but also the suppliers claiming they were complicit in the fraud, even though they may not have been aware of the misreporting. Going after third parties is known as "scheme liability".

Of key note to companies worldwide is that if this case establishes that third parties can be dragged into class actions, then merely doing business with US firms could unwittingly ensnare you in a transaction that could later be portrayed as fraudulent or deceptive by US litigators.

posted by John Wilson @ 5:39 PM Permanent Link newsvine reddit


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