SEC Pressured to Support Third-Party Liability
Posted May 29, 2007 9:00 AM CST
By Debra Cassens Weiss
The Securities and Exchange Commission is under pressure to support investors in a Supreme Court case that asks whether third-parties may be held directly liable for helping boost a failing company’s stock price.
Securities class-action lawyer Bill Lerach is among those lobbying the SEC to side with investors in Stoneridge Investment Partners v. Scientific-Atlanta Inc., according to the Wall Street Journal (sub. req.). Lerach represents Enron shareholders in a similar case, and he wants the Supreme Court to review it along with Stoneridge.
In 1994, the U.S. Supreme Court ruled that third parties may not be liable for aiding and abetting a corporate fraud. Stoneridge seeks to hold third parties directly liable for joining in transactions that allegedly helped a cable TV company inflate its financial picture in what is known as scheme liability.
An amicus brief in the case would have to be filed by June 11, according to SCOTUSblog.