(CN) - The 5th Circuit upheld the denial of class certification in a securities fraud lawsuit accusing Halliburton and former CEO David Lesar of overstating the company's assets and understating its potential liability in asbestos litigation.
The federal appeals court in New Orleans upheld the district court's assessment that investors failed to prove "loss causation" - that Halliburton's correction of previous misstatements caused the stock price to fall and investors to lose money.
Halliburton and Lesar argued that the lower court had applied the wrong standard for loss causation by requiring them to actual fraud.
"Our review of the district court's order and the evidence leads us to conclude, however, that the district court fully understood loss causation under our precedent and correctly applied the legal standard," Senior Judge Thomas Reavley wrote.
Investors accused Halliburton and Lesar of understating the company's exposure in asbestos litigation by $20 million to $30 million, providing an inaccurate accounting of engineering and construction revenue, and overstating the cost-savings of a merger with Dresser Industries.