The Stoneridge (a.k.a. Charter Communications) case on scheme liability pending before the U.S. Supreme Court may or may not be “the biggest securities litigation case in a generation,” but it has certainly generated more pre-argument media coverage than Dura and Tellabs put together. Much of that coverage has focused on whether the SEC/DOJ would submit a brief today in support of the plaintiff investors. The Wall Street Journal had an editorial on the topic this past weekend.
Although the SEC apparently recommended that the Solicitor General file the brief – see this Bloomberg article for the details – it does not appear that the recommendation was accepted. Reuters reported earlier today that it was “unlikely” the filing would be made and, as of the time of this post, there is no indication that it has happened. If not, the government has the option of filing a brief in support of the defendants (due in 30 days) or simply remaining silent.
Whatever the government’s position, however, the show goes on for the parties. The plaintiff investors filed their brief today.
Quote of note (plaintiffs’ brief): “Legitimate business will be unaffected if the Court adopts a test giving effect to the plain text of Section 10(b) and Rule 10b-5, but going no further. One proposed test would be that: a person engages in a deceptive act as part of a scheme to defraud investors, and violates Section 10(b) and Rule 10b-5(a) and/or (c), if the purpose and effect of his conduct is to create a false appearance of material fact in furtherance of that scheme.”
Addition: As predicted, the government did not file an amicus brief in support of the investor plaintiffs. Press coverage can be found in Bloomberg and the Washington Post.
The 10b-5 Daily 