Lifting the Lid-U.S. investor lawyers regroup after court loss

By Martha Graybow

NEW YORK, Jan 16 (Reuters) - Shareholders who sue companies for fraud have been dealt a blow by the U.S. Supreme Court, but that doesn't mean their lawyers plan to slow down the pursuit of new cases against corporate America -- including those spurred by the mortgage market meltdown.

Business groups have cheered the high court's ruling in a closely watched case that limits shareholders' ability to sue third parties such as advisers, bankers and auditors that had dealings with companies engaged in accounting fraud.

Investor lawyers, though, say the ruling handed down on Tuesday is bad news for shareholders and will limit their possible recoveries when they are duped by companies in financial frauds. "This is the latest in a string of decisions that are clearly more favorable to the business interests and the business community in their desire to avoid accountability for their conduct," said Steven Toll, head of the securities practice at plaintiffs' law firm Cohen, Milstein, Hausfeld & Toll in Washington, D.C.

"The approach taken is totally antithetical to the interests of investors," he said.

Toll and other lawyers who specialize in investor class-actions, however, say they do not expect the ruling to curtail new filings in stock fraud lawsuits overall.

They say the decision covers only a subset of class-action litigation, and should not have a big impact on one of the hottest legal areas in business litigation: cases brought against lenders and banks over subprime lending.

"Good cases will still be brought, and investors will still recover, but we know the deck is pretty much stacked against us pretty much to the top," said Christopher Keller, a partner at law firm Labaton Sucharow LLP, which specializes in bringing securities fraud cases against big companies.