A “Morning Edition” story on the Supreme Court’s decision in Stoneridge v. Scientific Investors, Nina Totenberg doing the interviews.
NINA TOTENBERG: The ramifications of yesterday’s ruling are in the billions and involve suits like the one brought by Enron investors against banks that are accused of helping Enron conceal its perilous financial condition. The actual case decided by the court involves a cable company named Charter Communications.
The SEC said Charter engaged in sham transactions with two of its cable box suppliers. Using backdated documents, the suppliers helped Charter conceal a $20-million cash shortfall on its balance sheet. When Charter’s day of reckoning finally came, the losing investors sued not just Charter but the cable box suppliers to recover damages. The investors claimed that the suppliers, as knowing enablers, were liable too.
To the business community, this theory of so-called scheme liability was terrifying. John Engler is president of the National Association of Manufacturers.
Mr. JOHN ENGLER (President, National Association of Manufacturers): If you start to bootstrap liability that way, I mean, the fear was where does this end?
Heh. That’s what we call in the business “a soundbite.”
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