(Reuters) - The U.S. Supreme Court on Tuesday canceled arguments in a securities fraud dispute involving Virginia-based government contractor Leidos Inc after the company and investors told the court they had reached a settlement.
The justices were scheduled to hear oral arguments on Nov. 6, but in a brief order the court said the case had been removed from the calendar. A spokeswoman for Leidos, formerly known as SAIC, declined to comment on the settlement.
Leidos had appealed a lower court ruling allowing an investor lawsuit to proceed. The suit, led by the Indiana Public Retirement System, alleged that the company omitted and misstated key information in securities filings over its role in a troubled New York City payroll contract.
The Supreme Court in March agreed to hear the case.
On Oct. 6, both sides asked the court to suspend proceedings while they sought lower court approval for an “agreement in principle” to settle the dispute.
The lawsuit, filed in 2012, alleged Leidos had not disclosed its liability for employee fraud in connection with SAIC’s work building a computerized payroll system for New York City starting in 2001.
A kickback scheme that occurred during the project led to fraud charges against two SAIC employees. One pleaded guilty and the other was convicted at trial. The company paid more than $500 million in fines as a result of a 2012 settlement.
The retirement fund alleged that SAIC failed to properly disclose its liability in filings to the U.S. Securities and Exchange Commission regarding any known trends or uncertainties that could impact its business.
Last year, the New York-based 2nd U.S. Circuit Court of Appeals allowed the suit to go ahead. Leidos appealed to the Supreme Court, arguing that SEC rules do not compel the kind of disclosure the appeals court’s decision requires and warned that the lower court ruling has led to a spike in lawsuits.
Reporting by Andrew Chung; Editing by Will Dunham