From Commissioner Paul Atkins of the SEC, writing in Friday’s Wall Street Journal:
Last week, the Supreme Court rejected the claims of certain defrauded investors when it handed down the decision in Stoneridge Investment Partners LLC v. Scientific-Atlanta, Inc. This week the court refused to hear the appeal of Enron investors, who raised similar claims.
Is this proof that the court is insensitive to victimized investors? Hardly. It is the mark of a court that insists on predictability and the rule of law — principles that are fundamental to the protection of investors and success of their investments. Although some have called Stoneridge “anti-investor,” the Supreme Court’s decision actually protects shareholders from creative and unpredictable new ways to extract large settlements, which always include an ample portion for the lawyers.
The danger now, Atkins warns, is that Congress will rewrite securities law to revive litigation aimed at reaching into deep and unrelated pockets. And the SEC will feel the political pressure too.
The SEC has an enormous responsibility not only to enforce the securities laws as written, but also to avoid rewriting and expanding them in the process. The integrity of our capital markets and the welfare of investors depend on the adherence to the rule of law by all participants. That is the lesson of Stoneridge.
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