Bloggers Concur That 'Stoneridge' Looks Like a Winner for Wall Street
Law bloggers rarely concur on any topic, but in the aftermath of today's oral argument before the Supreme Court in Stoneridge v. Scientific Atlanta, most are predicting a victory for business advisers and a loss for the plaintiffs bar.
For those who don't recall our earlier coverage of Stoneridge, the case raises the question of whether "secondary actors" like lawyers or business advisers who participate in fraudulent transactions can be sued under securities fraud laws. Here's what bloggers have to say:
At SCOTUS Blog, Lyle Denniston (who observed this morning's argument) opines that:
there seemed hardly a chance — even a remote one — that federal law against stock fraud would be read to give investors a significant new tool to go after stock fraud themselves. With the seeming exception of only Justice Ruth Bader Ginsburg, and the possible added exception of Justice David H. Souter, members of the Court showed little to no sympathy for opening up a broad new category of liability to investors.
Like Denniston, professor Oesterle agrees at Business Law Prof Blog that:
the defendants will prevail on a probable vote of 5-3 (Justice Breyer did not participate). In other words, the Court will limit secondary liability in private securities cases that otherwise could catch lawyers, accountants and auditors, and investment advisers who have aided those who engage in direct securities fraud.
But unlike his counterparts in the business community, Oesterle doesn't foresee disaster even if the plaintiffs prevailed. He writes that even if the Court applies "aiding and abetting" standards, most lawyers and accountants would still be immune from suit since "aiding and abetting" requires a showing of intent, which most lawyers can skillfully avoid with proper papering of a transaction.
Andrew Lavoott Bluestone at New York Malpractice Blog doesn't have a prediction, but says to keep watch on the decision for what it might say about legal malpractice or lawyer liability issues.
Finally, Professor Bainbridge has this post on why the Supreme Court gets it wrong so often. In a lengthy post, Bainbridge argues that neither the Supreme Court justices nor their clerks have any in-house expertise on securities law. So rather than attempt to master this often dry, technical topic, they defer to experts, who may have their own agenda.
Posted by Carolyn Elefant on October 9, 2007 at 07:20 PM | Permalink
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