News Feed Item

In Stoneridge Decision, Supreme Court Affirmed Private Right of Action for Deceptive Conduct Against Secondary Actors, But Unduly Stringently Defined When Such Liability Exists, Shareholder Advocates Say

In Stoneridge Decision, Supreme Court Affirmed Private Right of Action for Deceptive Conduct Against Secondary Actors, But Undul

WASHINGTON, Jan. 16 /PRNewswire-USNewswire/ -- The National Association of Shareholder and Consumer Attorneys (NASCAT) said the Supreme Court's January 15 Stoneridge decision did not shut the door to liability for secondary actors who commit primary violations in connection with corporate securities fraud. While a five Justice majority in Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., et al., No. 06-43 found that the specific linkage between the secondary actors and the fraud in that case was too remote for them to be held liable to shareholders for fraud, it recognized instances where such liability would be appropriate.

"We are pleased that the Supreme Court reaffirmed that Section 10(b) liability extends to secondary actors who play a primary role in corporate fraud schemes," said Carol Gilden, NASCAT's president. "The Court also affirmed that under circumstances different from those in the Stoneridge case, secondary actors -- which in certain cases could include accountants, bankers, lawyers and others -- may continue to be found liable for deceptive conduct. Nonetheless, the Court imposed an overly restrictive view of the circumstances under which such liability may exist, drawing an artificial distinction between whether a secondary actor's wrongful conduct took place in the investment sphere as opposed to that of ordinary business operations."

In the underlying suit, Stoneridge Investment Partners and other shareholders in Charter Communications Inc., a national cable TV and internet service provider, alleged that two of Charter's equipment suppliers, Scientific-Atlanta, Inc. and Motorola Corp., knowingly engaged with Charter executives in a scheme to inflate revenues reported to investors on Charter's financial statements. Scientific-Atlanta and Motorola have each paid substantial fines to the SEC to settle similar charges of fraudulent conduct in the falsification of financial statements issued to shareholders of another cable company, Adelphia Communications. In addition, two Charter executives have been sentenced to over a year in prison for their role in creating the false paper trail for, and cover up of, the sham transactions at issue in Stoneridge.

"While not disputing investors' factual allegations, the Supreme Court said in effect that the roles played by Scientific-Atlanta and Motorola, under the particular facts in this case, were too remote from the wrongdoing to be held liable to Charter's investors," Ms. Gilden continued. "However, the fraud could not have occurred without the active, knowing participation of these actors -- each of whom engaged in conduct that was inherently deceptive itself, not ordinary business acts that merely aided the fraud -- and we agree with Justice John Paul Stevens who, writing for the three dissenting Justices, said the Court's view was 'unduly stringent' in relieving them from liability."

"We also agree with Justice Stevens and the dissent that, contrary to the concerns articulated by the majority, scheme liability for secondary actors would not shift securities offerings to foreign markets or harm U.S. competitiveness," Ms. Gilden added. "But, rather, as the dissent noted: 'investor faith in the safety and integrity of our markets is their strength. The fact that our markets are the safest in the world has helped make them the strongest in the world.' "

The National Association of Shareholder and Consumer Law Attorneys is a nonprofit organization comprised of about 100 law firms representing consumers and investors - including pension funds and individuals - in cases of securities fraud and other forms of "white collar" wrongdoing and criminal activity.

National Association of Shareholder and Consumer Attorneys

CONTACT: Jeff McCord of McCord & Associates Public Relations, Northern
Virginia: +1-540-364-4769, Cell: +1-540-272-6181, [email protected], for
National Association of Shareholder and Consumer Attorneys; or Carol Gilden,
President of National Association of Shareholder and Consumer Attorneys,
Chicago: +1-312-357-0370, [email protected]

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
DX World EXPO, LLC, a Lighthouse Point, Florida-based startup trade show producer and the creator of "DXWorldEXPO® - Digital Transformation Conference & Expo" has announced its executive management team. The team is headed by Levent Selamoglu, who has been named CEO. "Now is the time for a truly global DX event, to bring together the leading minds from the technology world in a conversation about Digital Transformation," he said in making the announcement.
"Space Monkey by Vivent Smart Home is a product that is a distributed cloud-based edge storage network. Vivent Smart Home, our parent company, is a smart home provider that places a lot of hard drives across homes in North America," explained JT Olds, Director of Engineering, and Brandon Crowfeather, Product Manager, at Vivint Smart Home, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Conference Guru has been named “Media Sponsor” of the 22nd International Cloud Expo, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. A valuable conference experience generates new contacts, sales leads, potential strategic partners and potential investors; helps gather competitive intelligence and even provides inspiration for new products and services. Conference Guru works with conference organizers to pass great deals to gre...
DevOps is under attack because developers don’t want to mess with infrastructure. They will happily own their code into production, but want to use platforms instead of raw automation. That’s changing the landscape that we understand as DevOps with both architecture concepts (CloudNative) and process redefinition (SRE). Rob Hirschfeld’s recent work in Kubernetes operations has led to the conclusion that containers and related platforms have changed the way we should be thinking about DevOps and...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develop...
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
The next XaaS is CICDaaS. Why? Because CICD saves developers a huge amount of time. CD is an especially great option for projects that require multiple and frequent contributions to be integrated. But… securing CICD best practices is an emerging, essential, yet little understood practice for DevOps teams and their Cloud Service Providers. The only way to get CICD to work in a highly secure environment takes collaboration, patience and persistence. Building CICD in the cloud requires rigorous ar...
Companies are harnessing data in ways we once associated with science fiction. Analysts have access to a plethora of visualization and reporting tools, but considering the vast amount of data businesses collect and limitations of CPUs, end users are forced to design their structures and systems with limitations. Until now. As the cloud toolkit to analyze data has evolved, GPUs have stepped in to massively parallel SQL, visualization and machine learning.
"Evatronix provides design services to companies that need to integrate the IoT technology in their products but they don't necessarily have the expertise, knowledge and design team to do so," explained Adam Morawiec, VP of Business Development at Evatronix, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...
Widespread fragmentation is stalling the growth of the IIoT and making it difficult for partners to work together. The number of software platforms, apps, hardware and connectivity standards is creating paralysis among businesses that are afraid of being locked into a solution. EdgeX Foundry is unifying the community around a common IoT edge framework and an ecosystem of interoperable components.
"ZeroStack is a startup in Silicon Valley. We're solving a very interesting problem around bringing public cloud convenience with private cloud control for enterprises and mid-size companies," explained Kamesh Pemmaraju, VP of Product Management at ZeroStack, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Large industrial manufacturing organizations are adopting the agile principles of cloud software companies. The industrial manufacturing development process has not scaled over time. Now that design CAD teams are geographically distributed, centralizing their work is key. With large multi-gigabyte projects, outdated tools have stifled industrial team agility, time-to-market milestones, and impacted P&L stakeholders.
"Akvelon is a software development company and we also provide consultancy services to folks who are looking to scale or accelerate their engineering roadmaps," explained Jeremiah Mothersell, Marketing Manager at Akvelon, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Enterprises are adopting Kubernetes to accelerate the development and the delivery of cloud-native applications. However, sharing a Kubernetes cluster between members of the same team can be challenging. And, sharing clusters across multiple teams is even harder. Kubernetes offers several constructs to help implement segmentation and isolation. However, these primitives can be complex to understand and apply. As a result, it’s becoming common for enterprises to end up with several clusters. Thi...