The High Court says a Feltex prospectus, issued two years before the carpet manufacturer went into receivership, was not misleading.
Investor Eric Houghton took the case, on behalf of shareholders, against seven company directors for losses arising from what he claimed was a misleading 2004 prospectus.
The High Court has found the prospectus portrayed an improving financial position for Feltex but also identified risks.
It says it was not misleading.
The former Feltex directors have issued a statement saying they regret people lost money when the company was forced into receivership in 2006 but are pleased the court has rejected the claim in its entirety.