Wednesday, January 16, 2008

Supreme Court Rejects Scheme Liability in Stoneridge

The long awaited decision in Stoneridge Investment Partners, LLC vs. Scientific-Atlanta, Inc. was issued today. The Supreme Court, in a 5-3 decision, rejected the concept that secondary actors, such as bankers, auditors, vendors and attorneys, who do not themselves make misleading statements, are liable to assisting the company that does make misleading statements.

The case is significant, as the defendants in the case did in fact make misleading statements, in that they assisted the issuer's fraud. It is therefore an expansion of Central Bank, which holds that there is no aiding and abetting liability under 10b-5.

The decision is here.
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