SEC Urged to Take Pro-Investor Position in Supreme Court Cases

Next term the Supreme Court will hear argument, in the Charter Communications case, whether third parties can be liable as primary violators by participating in a scheme to defraud under Rule 10b-5(2), or or they simply aiders and abetters whom private parties cannot sue under Central Banks. Plaintiffs in a similar suit charging the investment banks involved in some Enron financings with fraud have asked the Supreme Court to take up their case as well.  In the past few weeks William Lerach, attorney for the plaintiffs in the Enron case, and others have waged an intense lobbying campaign to persuade the SEC to file an amicus brief on the side of the investors.  The SEC supported imposing scheme liability on the bankers at the district court level in the the Enron case, but the agency has taken positions contrary to private plaintiffs in Supreme Court amicus briefs in several major recent Supreme Court cases, including Tellabs. See WSJ, SEC's Allegiances Are Put to Test.