Stoneridge, Securities Fraud Litigation, and the Supreme Court

摘要

When the Central Bank majority held that, because Congress did not specifically mention aiding and abetting in drafting Section 10(b) it must not have meant to cover such activity, it committed an anachronistic error of the worst kind. In 1934, the universal rule was that those who knowingly participated in a fraud were to be held liable as joint tortfeasors. That is necessarily what Congress would have expected for Section 10(b). Had the Central Bank holding been limited to its facts (where the alleged wrongdoing was merely a failure to blow the whistle on a fraud in the absence of a fiduciary duty to do so), as a minority of lower courts had done since 1994, the error could have been substantially mitigated.