Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc.1 is the latest in a series of recent Supreme Court decisions restricting securities class actions. The Court?s holding in Stoneridge?rejecting scheme liability that would have roped in third party defendants? is of a piece with the Court?s recent skepticism toward securities
class actions. The Court?s recent decisions reflect a retrenchment from a two-decade-old decision by the Court, Basic, Inc. v. Levinson,2 which was the high-water mark for the implied cause of action the courts have found in the Securities Exchange Act § 10(b) and its implementing Rule 10b-5.3 Basic opened the doors wide to securities
fraud class actions under Rule 10b-5 by creating a presumption of reliance for lawsuits involving securities traded in the secondary public markets?the fraud on the market theory (FOTM). The result of the Basic decision was an upsurge in securities class actions.
Please see full article for more information. (This article is form the Cato Supreme Court Review 2007-2008).
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