Wednesday, June 13, 2007
SIFMA opposes extending Rule 10b-5 liability through the "scheme liability" theory. Here is its press release:
The Securities Industry and Financial Markets Association (SIFMA) today issued the following statement in response to the pending Supreme Court case, Stoneridge Investment Partners v. Scientific-Atlanta and Motorola. The Court’s ruling in the case could determine whether shareholders can collect damages from investment banks, attorneys, accountants, and other third-parties who did business with a company that engaged in fraud. Such an outcome would unnecessarily generate significant additional litigation, costing billions of dollars to American businesses, and putting US companies at a competitive disadvantage to their foreign counterparts.
“Expanding the scope of class action lawsuits to include third-parties would send large ripple effects throughout the US economy,” said Marc Lackritz, SIFMA president and CEO. “The inclusion of third-parties would cause litigation costs to skyrocket at the expense of the American economy and its workers, by raising the costs for companies in the US and deterring foreign investment in our economy.”
“President Bush got it right yesterday in reiterating the administration’s policy of not expanding the scope of private shareholder litigation against third-parties,” added Lackritz. “As the President said, this is not a case concerning investor protection; it’s about overzealous litigation. The SEC already has all the necessary regulatory tools to recoup lost money for investors.”