Newspaper article THE JOURNAL RECORD
Court Holds Illegal Acts Can't Halt Securities Fraud Suits / Death Sentence Thrown out Due to Lawyer's Comments
WASHINGTON - The Supreme Court ruled 8-0 Tuesday that stock traders who engage in fraud by convincing people to buy stock through false and incomplete information cannot be shielded from damage suits by those who purchased stock, even if the purchasers were aware the information was illegal ""inside'' information.
The court, with Justice Thurgood Marshall not participating, said a securities fraud lawsuit can't be dismissed simply because the defendant in the suit asserts that the person filing the case alsoviolated securities law.
Federal district and appeals courts have been divided over whether fraud by a plaintiff should bar a securities fraud lawsuit.
The high court ruled against Bateman, Eichler, Will, Richards Inc., a brokerage unit of Kemper Corp. The brokerage was sued by 10 persons who bought shares in T.O.N.M. Oil and Gas Exploration Corp.in 1979 and 1980. The company's stock fell sharply in 1981.
The suit charged that a T.O.N.M. executive passed on false and misleading inside information to the brokerage, which in turn gave the inside tips to the investors.
A federal district court dismissed the suit because the investors acted on the basis of insider information. A federal appeals court in San Francisco last April reinstated the lawsuit.
Also Tuesday, the Supreme Court:
- Ruled 7-0 in a case from Oregon dealing with office supplies that cooperatives engaged in wholesaling goods do not violate federal antitrust laws by expelling one of its members. Justices Thurgood Marshall and Lewis Powell did not participate.
- Citing the ""awesome responsibility'' of jurors in capital punishment cases, in a 5-3 decision threw out the death sentence of a Mississippi man because his jury was misled by the prosecutor.
The justices vacated the death sentence of Bobby Caldwell, 28, who has been on Mississippi's death row since 1981 for the 1980 murder of Elizabeth Faulkner during the robbery of a country store.
The high court, in an opinion written by Marshall, said the death sentence was unfair because the jury that sentenced Caldwell was led to believe their decision on his sentence would not necessarily determine his fate. …