WASHINGTON (September 17, 2009) –The North American Securities Administrators Association (NASAA) will testify in support of a bill to restore investors’ right to bring private actions against aiders and abettors of corporate deception and fraud.
Tanya Solov, Director of the Illinois Securities Department, will testify at 2 p.m. today before the Senate Committee on the Judiciary’s Subcommittee on Crime and Drugs to express NASAA’s support of the “Liability for Aiding and Abetting Securities Violations Act of 2009” (S. 1551).
“The integrity of the U.S. markets depends on accurate information and our laws must send the message to corporate management, as well as their lawyers, accountants, investment bankers and other so-called ‘secondary actors,’ that they will be held accountable for aiding and abetting in deception and fraud,” Solov said.
Solov pointed to two Supreme Court cases, Central Bank of Denver v. First Interstate Bank of Denver and Stoneridge Investment Partners, LLC v. Atlanta, Inc., that essentially eliminate the right to bring a private suit for aiding and abetting.
“The decisions in these cases interpret the securities laws in a way that protects big business, emboldens secondary actors to engage in manipulative practices and sets an extremely high bar for defrauded shareholders to seek compensation from wrongdoers,” Solov said. “If aiding and abetting liability is not restored by Congress, innocent victims of investment fraud will be left without a remedy against the entities that assisted in perpetrating the fraud.”
Sen. Arlen Specter (D-PA), chair of the Subcommittee on Crime and Drugs, sponsored the “Liability for Aiding and Abetting Securities Violations Act of 2009.”
“Given the recent financial scandals and corporate fraud, this legislation is a positive step in restoring accountability and the integrity of the U.S. markets,” Solov said.
The complete text of Director Solov’s testimony is available here.
NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada and Mexico.