Shareholders can pursue securities fraud claims even if they miss a chance to sell shares at a profit

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Shareholders can pursue securities fraud claims even if they miss a chance to sell shares at a profit

Shareholders can pursue securities fraud claims even if they miss a chance to sell shares at a profit

Reuters-

In a victory for investors, a federal appeals court said shareholders may still pursue damages for securities fraud even if they miss a chance to sell shares at a profit after the alleged misconduct is revealed.

The 2nd U.S. Circuit Court of Appeals in New York revived a lawsuit accusing China North East Petroleum Holdings Ltd, a crude oil production company in northern China, of misleading investors about its financial health and prospects.

While not ruling on the merits of the claims, the court said U.S. District Judge Miriam Goldman Cedarbaum in Manhattan erred in dismissing the case last October because the lead plaintiff failed to cash out of the stock when the price rebounded.

Wednesday’s decision “is significant for investors because it means temporary inflation in a stock price does not reduce damages,” said Jeremy Lieberman, a partner at Pomerantz Haudek Grossman & Gross in New York representing lead plaintiff Acticon AG, a European real estate consulting firm.

Michael Coffino, a partner at Coffino Law Group in San Francisco representing China North East, said he expects the case eventually to be dismissed.

“We obviously believe the ruling is incorrect,” he said. “The district court had raised the issue on its own, and all of our defenses and theories remain intact.”

[REUTERS]

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