Today was the deadline for the filing of briefs in Stoneridge, i.e., Stoneridge Investment Partners v Scientific Atlanta, a case before the U.S. Supreme Court that could dramatically expand the number and kind of businesses sued in securities fraud cases.
Here’s the NAM’s summary of the case, describing the parties, case history, etc.
The stakes are great, as NAM President John Engler described in a Washington Post column on July 2:
Since the first federal securities legislation in the 1930s, the law has drawn a line between those who commit securities fraud and everyone else. If you violate federal rules, you may be the target of a private lawsuit. Not your outside accountants or financial advisers. Not any company with which you did business. You.
Without this sharp, clear line, unscrupulous lawyers would have a hunting license to stalk any company that did any business with any publicly traded firm found guilty of violating U.S. securities law, if the company could in any way be charged with knowing, sort of knowing or “recklessly” not knowing of the fraud. It is this line that the high court is being asked to erase.
One of the high-drama aspects of the case is whether the Administration would side with the SEC in supporting the plaintiffs, the investors, those who would expand the pool of potential subjects to be sued. And the big news today? The solicitor general supported the arguments of Scientific Atlanta, Motorola and the NAM, disagreeing with the SEC. (The Department of Justice’s brief is available here as a .pdf file. Dow Jones story here). The NAM is very pleased with DOJ’s decision.
UPDATE (6:30 p.m.): WSJ Law Blog’s post has numerous links. (And wow! Look at quality of the first couple of blog commenters — So…subtle.)
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