Kerkorian appeal is rejected

The U.S. Supreme Court on Monday declined to block a lawsuit that accuses billionaire investor Kirk Kerkorian of selling more than 7 million DaimlerChrysler shares based on inside information that the automaker’s cash flow was declining.

The justices, without comment, rejected an appeal by Kerkorian and his investment company Tracinda Corp., leaving intact a lower-court decision that let the lawsuit proceed in federal court in Los Angeles.

The shareholder suit alleges that James Aljian, who helped manage Tracinda’s investments and served on DaimlerChrysler’s shareholder committee board, passed confidential information about the company to Kerkorian in 1999.

Over the next several months, Tracinda sold 7.6 million DaimlerChrysler shares, avoiding $120 million in losses at the expense of other shareholders, the suit says.

Kerkorian argued unsuccessfully before the high court that the suit was filed too late under federal securities law. The suit seeks class-action status on behalf of people who bought DaimlerChrysler stock during a three-month period in 1999.

Kerkorian was once the largest shareholder of Chrysler Corp., which combined with Daimler-Benz in 1998 to form the world’s No. 5 automaker.

DaimlerChrysler sold its U.S. Chrysler unit last year and now is known as Daimler. The company is based in Stuttgart, Germany.

Aljian, who was also named as a defendant, died last year.