U.S. Supreme Court considers landmark securities fraud case

On October 9, the U.S. Supreme Court hears oral argument in Stoneridge Investment Partners v. Scientific-Atlanta, which many view as the most important securities case in years.  At issue is the validity of "scheme liability" and whether third parties, such as financial advisors, auditors, attorneys, or vendors, who engage in allegedly fraudulent transactions with a public corporation, but who do not speak or provide financial statements or other disclosures to investors, can be held liable under SEC Rule 10b-5.

The bottom line is that a decision recognizing expanded liability under 10b-5 for third parties could have a potentially far-reaching impact, especially for auditors and lawyers who advise public corporations.  Find further discussion of the case and its implications here and here.