She says the Supreme Court majority “opted for a bright-line rule,” and in doing so the decision “diverges from the court's prior pattern of flexible standards for fraud and appears to insulate fund advisors and managers from section 10b-5 liability.”

David Hirschmann, president and chief executive officer of the Center for Capital Markets Competitiveness, a unit of the U.S. Chamber of Commerce, says the decision “will prevent yet another roadblock to our global competitiveness.”

“Expanding liability would have opened up the floodgates to even more costly and frivolous class action suits for businesses and give additional reasons for companies to raise capital outside the U.S.,” he adds. “This decision is a significant step in bringing greater certainty for these important market participants.”

Robin Conrad, executive vice president of the National Chamber Litigation Center, the public policy law firm of the U.S. Chamber, adds, “The Supreme Court correctly concluded, as the Chamber urged, that private liability under the securities laws must be construed quite narrowly.”

Conrad said that the “plaintiffs’ legal theory in this case was very aggressive, and would have exposed a whole new class of companies to frivolous securities lawsuits, from accountants to investment advisers to law firms.”

The case is Janus Capital Group, Inc., v. First Derivative Traders.

The Supreme Court decision on the case, first filed in 2003, reverses a 2009 decision by the 4th U.S. Circuit Court of Appeals.

The decision was written by Justice Clarence Thomas. It held that Janus Capital Group, which managed a family of mutual funds, could not be sued for allegations it misled investors in the prospectuses of its mutual funds because it and a unit that advised the funds, Janus Capital Management, were separate legal entities from the mutual funds themselves.

It dealt with a policy uncovered by then New York attorney general Eliot Spitzer that mutual funds were allowing favorite investors to buy shares of mutual funds at the day’s closing price—but after the market closed.

Justices Stephen Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan dissented.