Litigation

Using the financial reform conference committee to reverse Stoneridge

By Carter Wood

The House-Senate conference committee has been meeting on H.R. 4173, the financial reform bill, and among the points of negotiation is whether the bill should expand the grounds for private civil actions for aiding and abetting in securities fraud -- i.e., overturning the U.S. Supreme Court decision in Stoneridge Investment Partners v. Scientific Atlanta.

Rep. Maxine Waters (D-CA) is offering the amendment on the behalf of the House conferees, even thought the version of the bill that passed the House didn't have the Stoneridge language in it. And neither did the Senate! When the Senate was debating the bill, Sen. Arlen Specter (D-PA) urged the cosponsors to come to floor to support him in his amendment, but no one did. (Specter had sponsored a stand-alone bill, S. 1551, to reverse Stoneridge, as well.)

It's shoddy lawmaking to try to add extraneous amendments via a conference committee without the provision having passed one of the two chambers first. It happens, but it's arrogant and invites disregard for Congress.

My employers, the National Association of Manufacturers, strongly supports the U.S. Supreme Court's 2008 Stoneridge decision, which protects manufacturers from unfairly being held liable in securities litigation solely because they might have deeper pockets than the company that engaged in securities fraud.

Full post as published by Point of Law on June 16, 2010 (boomark / email).