DEL.ICIO.USFraud suit against Home Depot dismissed
The Atlanta Journal-Constitution
Wednesday, October 08, 2008
The federal appeals court in Atlanta on Wednesday dismissed a securities fraud class-action lawsuit accusing Home Depot and six corporate executives of improperly inflating financial results.
In a unanimous ruling, the 11th U.S. Circuit Court of Appeals said the lawsuit failed to clear the legal hurdles set by Congress in the Private Securities Litigation Reform Act of 1995.
“We’re pleased,” Home Depot spokesman Ron DeFeo said. “We’re happy to have this matter behind us.”
Five separate investors, with essentially identical complaints, filed lawsuits against Home Depot beginning in March 2006. The cases were consolidated with the Bucks County (Pa.) Retirement Board, a major Home Depot investor, named lead plaintiff.
They alleged that, during fiscal years 2001-04, Home Depot obtained excessive rebates from vendors, thereby inflating its revenues. The suit alleged the company’s stock price was improperly inflated due to this practice and the company violated securities by not informing its investors about it at the time.
The 11th Circuit ruling, written by Judge Stanley Marcus, noted that Congress opened the courthouse doors to securities litigation only for suits raising a “strong inference” companies acted with bad intent. The allegations in this litigation, Marcus said, “do not pass Congress’s stringent test.”
Robert Killorin, an Atlanta lawyer representing one of the plaintiffs, declined to comment on the ruling.
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