It’s not an anti-investor Supreme Court either

Hans, it’s also wrong to refer to this Supreme Court as anti-investor.

Two weeks ago, as I have noted, the Court unanimously ruled in favor of investors against 401(k) administrators. In a decision that I praised in a blog post and press release, the justices ruled that investors have a right to sue for breaches in individual pension plans.

But as I noted, the whole dichotomy used by the media of pro-investor or pro-consumer and anti-business is wrong. A frivolous investor suit, although it would favor a few investors or consumers and their attorneys, would harm the majority of investors by increasing costs to the corporations that they own. These costs would also harm the majority of consumers through fewer choices or higher prices passed on as a result of the increased costs.

As I said, “Investors are harmed as excessive litigation hurts legitimate companies, and liability costs deprive shareholders of greater returns.” So by both favoring investor suits in this case and discouraging the third-party fraud suits in the Stoneridge case, “the Court interpreted federal law correctly to allow legitimate lawsuits for clear breaches of fiduciary duties, but discourage frivolous suits that would drive up costs for the majority of investors.”