Justices Take Dim View of Expanded Liability in Investor Suits
Lawyers and other professionals apparently have little to fear about being targeted for aiding corporate fraud, based on oral arguments before the U.S. Supreme Court today.
SCOTUSblog reports that few justices appeared to endorse expanded liability in investor lawsuits.
“As the court concluded an hourlong hearing in a vitally important securities case, 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,” reported the blawg’s Lyle Denniston.
Only Justice Ruth Bader Ginsburg and possibly Justice David H. Souter appeared receptive to arguments that third-party professionals should be liable for participating in corporate fraud, the blawg says. Justice Stephen G. Breyer is not participating in the case, Stoneridge Investment Partners v. Scientific-Atlanta.
The Wall Street Journal (sub. req.) reports that most eyes were on the court’s two newest members, Chief Justice John G. Roberts Jr. And Samuel A. Alito Jr. They were not on the court when it refused to allow lawsuits for “aiding and abetting” corporate fraud in a 1994 case. Both appeared to disagree with expanded liability during today’s arguments.
Alito even suggested the new suit was essentially one for aiding and abetting fraud and was barred by the prior ruling. Roberts was also skeptical.
“My suggestion is that we should get out of the business of expanding” private securities suits, the chief justice said.
