Our stockbroker fraud law firm is hoping that Senate Bill 1551, introduced last July by Senator Arlen Specter, will resurface in the upcoming regulatory reform bill. If passed into law, the “Liability for Aiding and Abetting Securities Violations Act of 2009” would allow secondary actors that aided and abetted the primary violators of securities laws to also be sued for securities fraud.
The bill is trying to overturn the US Supreme Court rulings Stoneridge Investment Partners v. Scientific-Atlanta and Central Bank of Denver v. First Interstate Bank. Both decisions held that a private plaintiff cannot file a securities fraud claim against secondary actors. Under current law, only the US Congress has the sole authority to bring such claims with the US Securities and Exchange Commission.
With Senate Bill 1551, the Securities Exchange Act of 1934’s Section 20 would be amended so that anyone that recklessly or knowingly gave substantial help to a party that violated securities law could be held liable through a civil lawsuit to the same extent as the primary actor. Accountants, securities analysts, investment banks, law firms, credit rating agencies, and private companies are some of the possible secondary actors that could be sued as securities fraud defendants.
Related Web Resources:
Liability for Aiding and Abetting Securities Violations Act of 2009, Govtrack.us
Securities Exchange Act of 1934 (PDF)
Stoneridge Investment Partners v. Scientific-Atlanta, Oyez.org
Central Bank of Denver v. First Interstate Bank
Our stockbroker fraud law firm is committed to helping investors throughout the US recover their financial losses sustained as a result of securities fraud. Contact Shepherd Smith Edwards & Kantas LTD LLP today.