Securities Law

Court to Consider Nasdaq Liability

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An en banc appeals court will hear an appeal this week that seeks damages against Nasdaq for touting WorldCom stock in advertising.

The full 11th U.S. Circuit Court of Appeals based in Atlanta will hear arguments in the case on Tuesday, according to the Fulton County Daily Report.

The suit was brought by Florida attorney Steven Weissman, who had purchased 82,000 shares of the stock before the company collapsed in 2002.

A three-judge panel of the appeals court ruled last November that Nasdaq had lost immunity from civil liability granted under the 1934 Securities Exchange Act when it became a for-profit, publicly traded company.

Because Nasdaq ran ads touting WorldCom as a sound investment, it lost its immunity, the court ruled.

The ABA Journal covered the initial decision in “Stock Tip: Check Status of Exchange” in the May issue.

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