Justices Doubt Investors' Arguments

Washington Post ^ | 10 Oct 2007 | Robert Barnes

[oblomov]

It's been called the most important securities fraud case to reach the Supreme Court in years, with fortunes riding on the decision and the scandal of Enron just in the background.

But after oral arguments yesterday, it doesn't seem like much of a cliffhanger.

In this artist's rendering, attorney Stephen Shapiro argues before the Supreme Court on behalf of Charter Communications shareholders. In this artist's rendering, attorney Stephen Shapiro argues before the Supreme Court on behalf of Charter Communications shareholders. (By Dana Verkouteren -- Associated Press) TOOLBOX Resize Text

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Chief Justice John G. Roberts Jr.'s aggressive questioning seemed to set the tone for a majority suspicious of expanding the ability of investors who lost money through corporate fraud to sue businesses that may have facilitated the crime.

The case involves a cable company and the suppliers of cable boxes, but it has largely been seen as a stand-in for investors who want to go after banks and others who allegedly allowed Enron to disguise its financial problems.

[oblomov]

Let me get this straight- an owner of the company doesn't have standing, but the SEC does? So the role of the SEC is to protect management from the owners of the company? That's part of being a "regulator", I guess.

[L,TOWM]

an owner of the company doesn't have standing, but the SEC does? So the role of the SEC is to protect management from the owners of the company?

>>>>>>Plaintiffs' lawyers say sometimes the only way for investors to recover money lost because of a company's fraudulent actions is to go after what are known as "secondary actors," who could include vendors, accountants and lawyers. But the nation's business interests say Congress has given regulators the authority to punish lawbreakers and increasing the number of lawsuits will just put U.S. firms at a global disadvantage.<<<<<<<<

>>>>>>>But several justices said the investors were asking for new avenues for bringing civil suits and didn't seem enthusiastic about granting them.<<<<<<<<<< >>>>>>>>"I see no limitation to your proposal" for assigning liability, Justice Anthony M. Kennedy told Stanley M. Grossman, an attorney for Stoneridge Investment Partners.<<<<<<<<
(If you think this is granny pushing her shopping cart in skid row and eating Alpo because she got ripped off by the eeeeevil corporation, I got some prime land in Floriduhh for ya.)

>>>>>>>>And Roberts said Congress is now taking the lead on when private actions are allowed and when it wants the Securities and Exchange Commission to go after wrongdoers. "My suggestion is that we should get out of the business of expanding it, because Congress has taken over and is legislating in the area in the way they weren't back when" the court implied private investors had the right to sue, Roberts said.<<<<<<<<<<

Buddy, I am trying to figure out where you got you assertion from in the body of the article, but I just could'nt find it.
The issue here is how many people can get sued by the "owners", when "owners" lose money on a company that goes belly up.
Refreshingly (and surprisingly), the court is telling the rest of their attorney buddies that they can't go after unlimited sets of deep pockets.

I don't see anything in the article about standing or letting primary actors off the hook.

[highball]

The issue here is how many people can get sued by the "owners", when "owners" lose money on a company that goes belly up.
Refreshingly (and surprisingly), the court is telling the rest of their attorney buddies that they can't go after unlimited sets of deep pockets.

I think any company that conspires to defraud another company's shareholders should be open to lawsuits. We're not exactly talking about an honest mistake here.