By: michael j hassett

michael j hassett — Wed, 16 Jan 2008 17:12:37 +0000

Perhaps private rights of action under Section 10 (b) of the 34 Act should be limited, even eliminated, but the “reliance” approach taken by the Court defies the reality of the market. Everyone involved understood that the only possible purpose of the scheme was to create phony revenue for Charter. Everyone understood that this revenue would appear in Charter’s financial statements, upon which investors would rely. That was the whole point. As Good As News helpful hint to Justice Roberts, if you want to limit liability arbitrarily then use good old fashioned privity. If you want to use reliance, then recognize that public companies publish financial statements and investors rely upon them. Look to the question of whether or not the “scheme” could have any purpose other than the fraudulent manipulation of the financial statements if you want to use a realistic reliance approach that gives some comfort to suppliers of legitimate goods and services caught up as alleged accomplices in securities fraud.

By: Steve Jaros

Steve Jaros — Wed, 16 Jan 2008 17:02:46 +0000

I hope Roberts didn’t actually *promise* unity, because no CJ can reconcile these kinds of fundamental disagreements.

By: Jeremy Pierce

Jeremy Pierce — Tue, 15 Jan 2008 22:43:10 +0000

It was a two-vote majority, though, even if Breyer would have made it 5-4.

By: Patrick Luff

Patrick Luff — Tue, 15 Jan 2008 21:31:05 +0000

Another closely divided decision from the Roberts Court. So much for the unity he promised in his confirmation hearings.

Comments on: Court limits securities fraud lawsuits

By: michael j hassett

By: Steve Jaros

By: Jeremy Pierce

By: Patrick Luff