Forum
U.S. Supreme Court
Case Status
Decided
Docket Number
06-43
Term
2007 Term
Oral Argument Date
October 09, 2007
Questions Presented
Whether this Court’s decision in Central Bank, N.A. v. First Interstate Bank, N.A., 511 U.S. 164 (1994), forecloses claims for deceptive conduct under § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5(a) and (c), 17 C.F.R. 240.l0b-5(a) and (c), where Respondents engaged in transactions with a public corporation with no legitimate business or economic purpose except to inflate artificially the public corporation’s financial statements, but where Respondents themselves made no public statements concerning those transactions.
Case Updates
Supreme Court rejects primary liability for secondary actors under the securities laws
January 15, 2008
The Supreme Court held that Section 10(b) of the Securities Exchange Act does not authorize a private right of action against third parties unless plaintiffs can demonstrate reliance on the defendants’ own conduct.
U.S. Chamber files amicus brief on the merits
August 15, 2007
NCLC urged the Supreme Court to affirm the Eighth Circuit’s conclusion that Section 10(b) of the Securities Exchange Act does not authorize a private right of action against third parties for so-called “scheme liability.” In its brief, NCLC argued that that scheme liability - which is nothing more than aiding and abetting liability in disguise and is not supported by the terms of the statute - would disadvantage American issuers of securities because they would have to price their commercial transactions to reflect the substantial added risk of liability for their business partners. To avoid litigation risk, both domestic and foreign companies would have significant incentives to do business with companies listed on foreign exchanges, or with private companies.