NASAA Responds to U.S. Supreme Court Decision in Stoneridge Case

WASHINGTON, D.C.—The North American Securities Administrators Association (NASAA) today expressed its disappointment over the U.S. Supreme Court’s 5-3 ruling against the plaintiffs in Stoneridge Investment Partners v. Scientific-Atlanta Inc., which has closed an important avenue for investors to seek redress in the courts.

“The Court missed an important opportunity to make clear that all of the principal actors in a fraudulent scheme — not just those who disseminate falsehoods — must answer to their victims. Far from burdening our markets, a decision for the plaintiffs in Stoneridge would have done much to protect the integrity of our markets to the benefit of investors and legitimate businesses alike,” said NASAA President and North Dakota Securities Commissioner Karen Tyler.

Tyler said NASAA will continue to support the vital role of private remedies in sustaining investor confidence. “The Supreme Court has repeatedly stated that the private cause of action is an ‘essential tool’ for the effective enforcement of securities laws,” Tyler said. “Congress echoed the point when it declared that ‘private lawsuits promote public and global confidence in our capital markets and help to deter wrongdoing’ and we intend to work with Congress to clarify the rights of investors.”

In June, 2007 NASAA filed an amicus brief in the U.S. Supreme Court in support of an appeal by Stoneridge in its case against Scientific-Atlanta, Inc. and Motorola Inc. Specifically, NASAA supported Stoneridge’s ultimately unsuccessful appeal in support of an investor’s right to sue those who have participated in securities fraud through deceptive conduct, not just through misrepresentations and omissions, under Section 10(b) of the Securities Exchange Act of 1934.

Private actions by defrauded investors are an enormously important complement to regulatory enforcement actions as a means of policing the securities marketplace, Tyler said. “State and federal securities regulators work tirelessly to detect, enjoin, and punish financial fraud. However, private actions not only provide the principal means of compensation for victims of securities fraud, they also play a vitally important role in protecting the integrity of the marketplace through deterrence,” she said.

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, the provinces and territories of Canada, and Mexico.

NOTE: NASAA’s June 11, 2007 amicus brief in the Stoneridge appeal is available here.

For more information:
Bob Webster, Director of Communications


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2008 Headlines, Newsroom