Guilty by Association or Something More?
Stoneridge vs. Scientific-Atlanta / Motorola
Discovering the facts and allegations of the controversial and “most important securities law case in a generation.”
This case is said to be one of the most (if not the most) important securities law cases that the Supreme Court has considered in more than a decade (deVogue 1). It involves a wide range of issues from basic separation of power issues to core securities litigation policy. With this is mind, the Court decided to take a rather narrow look at the case, asking parties to solely address the question of:
“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… and Rule 10b-5…, 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” (Bainbridge).
Here we are looking at Rule 10b-5, which is probably the most popular, if not the most important of the SEC’s many rules. It first became a debatable issue in 1994 when the Supreme Court, usually referred to as SCOTUS by people who are familiar with it, ruled on the case mentioned in the above quote. Before that point, it was decided that “courts must infer how the 1934 Congress would have addressed the issue had the 10b-5 action been included as an express provision in the 1934 Act,” but the court had since acknowledged it to be an “awkward task,” some ...