So the legal question for the day is how many lawsuits will be born out of the implosion of Bear Stearns? The preliminaries are already underway. (See "Stunned Bear Stearns investors eye legal claims.")
"This is a stock that has gone from 50 to 2 literally overnight, and I also know of people who had assumed that the worst had passed when it closed at 30," said Ira Press, a lawyer at class-action firm Kirby McInerney, which has spoken with investors about the matter.
Showing posts with label securities. Show all posts
Showing posts with label securities. Show all posts
Monday, March 17, 2008
Tuesday, January 15, 2008
U.S. Supreme Court turns back 10(b) action
Securities-fraud types have been awaiting the U.S. Supreme Court’s decision in Stoneridge Investment Partners v. Scientific Atlanta, and today the court 5-3 affirmed the 8th U.S. Circuit Court of Appeals in finding no private cause of action under Rule 10(b) of the Securities Exchange Act of 1934 for investors who were victimized by an apparent fraud.
In the absence of proof of reliance upon a plan to prop up stock prices, investors can’t sue third parties to the fraud who made misstatements because the statute does not extend to aiding and abetting liability and the misleading financial statements were not made public, the court found. The court rejected petitioners’ theory of “scheme liability,” which would allow them to rely not only on financial statements, but on the market transactions those statements reflect. If that rule were to be adopted, the Rule 10(b) action would reach the entire market in which the issuing company does business, the court said.
Justice Anthony Kennedy was joined in the majority by Chief Justice John Roberts Jr. and Justices Antonin Scalia, Clarence Thomas and Samuel Alito. Justice John Paul Stevens wrote the dissent, joined by Justices David Souter and Ruth Bader Ginsberg. Justice Stephen Breyer recused himself.
In the absence of proof of reliance upon a plan to prop up stock prices, investors can’t sue third parties to the fraud who made misstatements because the statute does not extend to aiding and abetting liability and the misleading financial statements were not made public, the court found. The court rejected petitioners’ theory of “scheme liability,” which would allow them to rely not only on financial statements, but on the market transactions those statements reflect. If that rule were to be adopted, the Rule 10(b) action would reach the entire market in which the issuing company does business, the court said.
Justice Anthony Kennedy was joined in the majority by Chief Justice John Roberts Jr. and Justices Antonin Scalia, Clarence Thomas and Samuel Alito. Justice John Paul Stevens wrote the dissent, joined by Justices David Souter and Ruth Bader Ginsberg. Justice Stephen Breyer recused himself.
Subscribe to:
Posts (Atom)
