The Wall Street Journal: Tribunal Supremo se enfrenta al dilema del "Securities Fraud Lawsuits"

Investors Seek Third-Party LiabilityFor Securities-Fraud Lawsuits

By MARK H. ANDERSON

WASHINGTON -- Investors who lost money in a cable company's accounting-fraud scandal argued before the Supreme Court Tuesday that federal securities laws give them the right to go after third parties that participated in fraudulent transactions.

The arguments came as the high court heard the appeal in Stoneridge Investment Partners v. Scientific-Atlanta Inc. and Motorola Inc. This closely watched securities lawsuit could extend liability to vendors, accounting firms or others in private securities lawsuits, such as Wall Street firms that did work for Enron.
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However, both Chief Justice John Roberts Jr. and Justice Samuel Alito in their questions appeared that they don't believe federal law allows investors to go after third parties.
"My suggestion is that we should get out of the business of expanding it," Chief Justice Roberts said of private-securities lawsuit rights. He added later that he thought the plaintiffs arguments were "inconsistent with Congress' intent" on securities lawsuits. Justices Roberts and Alito are the two justices hearing the Stoneridge appeal who didn't rule on a similar securities-law issue in 1994.

"Respondents' conduct violates the plain language of the statute and rule under any natural reading," attorneys for the investors told the high court in briefs filed ahead of the oral arguments.

The two companies, backed by a broad array of corporate interests, and the Justice Department, arguing the opposite, say federal law bars privately brought third-party securities suits.

"Implied private suits are unnecessary to deter secondary actors from participating in a public company's fraud or to compensate investors," the companies said.
Business comes into the argument with a winning streak on securities cases, with four unanimous or near unanimous rulings since 2004. The Stoneridge case also comes before the court after the companies won favorable rulings at lower courts.

Corporations are still nervous because the case leaves open the possibility that the Supreme Court could, if the justices allow claims against third parties, permit investors to sue vendors and perhaps Wall Street firms, attorneys and others who advise public companies.
The Stoneridge lawsuit began in the wake of an accounting fraud scandal at Charter Communications Inc. A group of investors sued Scientific-Atlanta Inc., now a unit of Cisco Systems Inc., and Motorola. The companies, vendors for the cable company, allegedly participated in a cable control-box sales scheme that inflated Charter's revenue by $17 million in a much larger accounting scheme. (Charter isn't a party to the lawsuit.)

A trial judge dismissed the lawsuit in favor of business defendants before it ever got started, in a ruling that said Supreme Court precedent limited such suits to primary violators of federal securities laws. The Eighth U.S. Circuit Court of Appeals in St. Louis in 2006 affirmed the trial court with a short opinion.

How the justices rule in the Stoneridge case may turn on a 1994 ruling known as Central Bank of Denver that said federal securities laws don't allow "aiding and abetting" lawsuits against third parties. Although business won this case, the 5-4 vote outcome suggests the Stoneridge appeal might also split the high court.

Six justices still on the court who heard the Central Bank of Denver appeal split 3-3 when they voted in 1994. Assuming the views of those justices haven't changed, that leaves Chief Justice John Roberts Jr. and Justice Samuel Alito as the deciding votes in the Stoneridge appeal. Justice Stephen Breyer, who holds stock in the parent of an involved company, is recused from the case.
"The defense may well have the upper hand here, but it is certainly much too close to call," said Tom Goldstein, a Washington-based attorney with Akin Gump.
Write to Mark H. Anderson at mark.anderson@dowjones.com

El País: Tribunal Supremo de los EEUU se niega a revisar juicios por presuntos secuestros de la CIA

La Justicia de EE UU rechaza definitivamente juzgar el caso de Jaled el Masri

El Tribunal Supremo no revisará su denuncia por secuestro y torturas, que no fue admitida a trámite por afectar a secretos de Estado

El Tribunal Supremo de EE UU ha rechazado este martes la apelación del ciudadano alemán de origen libanés Jaled el Masri, que denunció haber sido secuestrado y torturado por la CIA en Afganistán, para revisar su caso. La denuncia de El Masri no fue admitida a trámite por la Justicia estadounidense al considerar que un juicio expondría a la luz pública secretos de Estado y esta decisión de la última instancia judicial confirma implícitamente esta interpretación.
Los abogados de El Masri arguyeron en su apelación que la celebración del juicio no dependía de la desclasificación de secretos de Estado, por lo que debía admitirse a trámite para que la denuncia fuera juzgada en un tribunal estadounidense. Como es habitual, el Tribunal Supremo no ha comentado los motivos de su decisión, pero su negativa a revisar el caso supone la confirmación definitiva de que la denuncia atañe a secretos de Estado.

El Masri presentó su denuncia en diciembre de 2005, en la que aseguraba haber sido secuestrado durante un viaje a macedonia, conducido a Afganistán, golpeado, acosado y, cinco meses depués, liberado sin ninguna explicación. Como compensación exigía 75.000 dólares y una disculpa de la administración estadounidense.

Sin embargo, el Gobierno pidió a la justicia que rechazara la denuncia sin examinarla siquiera, arguyendo que los hechos denunciados afectaban a actividades de la CIA que no podían ser confirmadas ni desmentidas. El juzgado de primera instancia y un tribunal de apelación accedieron a la petición gubernamental, señalando que, aunque el gobierno estadounidense hubiera reconocido la existencia de un programa de prisiones y traslados de sospechosos de terrorismo por parte de la CIA, esto no constituía el objeto de la denuncia.

Los abogados de El Masri recurrieron entonces a la más alta instancia judicial estadounidense para que clarificase los límites del secreto de Estado, señalando que la jurisprudencia limitaba hasta ahora las pruebas disponibles durante un proceso, no la celebración del proceso mismo. La decisión de este martes, sin embargo, descarta definitivamente que el caso sea jusgado en Estados Unidos.

Washington Post: Otro gran caso sobre fraude contable

The 'Roe v. Wade of Securities Law'

The Supreme Court this morning hears oral argument in a securities case that has lawyers, accountants, bankers and other potential "aiders and abettors" quaking in their white shoes. Will the justices expand the scope of federal law to allow more fraud lawsuits against corporate targets? Or will they hold the line and limit that scope?

You don't need to be a doomed Enron investor or employee to care about the result.
The case is Stonebridge Investment Partners v. Scientific Atlanta, and in it the investor-plaintiffs claim that the defendant (and another big-money corporate defendant) assisted another company in defrauding them. While the defendants in this case are decidedly not from the so-called service-sector of the securities industry, it is not hard to understand why other third-parties who help corporate clients do deals and keep the books are worried about a brave new world of liability.

The good news for those professionals is that the justices marked themselves last term as a decidedly pro-business group. The bad news for the corporations here is that the legal and political momentum in our post-Enron world seems to be in favor of expanding investor rights. And, indeed, the decision here will affect one way or another the Enron-related cases that are pending even as Jeffrey Sklling is moldering in prison and Ken Lay is moldering in his grave.
Precedent? It goes to the corporations. The Supreme Court in 1994 ruled that a private plaintiff (instead of, say, a governmental entity) could not successfully sue any "aiders and abettors" under the Federal Securities Act of 1934. The link between the fraud and these third-parties, the court's majority determined, was too tenuous to bring them under the scope of the private action clause of the statute. And it's fair to say that the court is more conservative and more pro-business than it was in 1994.

If the justices keep the Stonebridge lawsuit alive, other investors surely will add new corporate defendants to ongoing fraud cases -- or initiate new ones. And if the justices end the Stonebridge case? Then it will be up to Congress to amend the securities law to make it clear which third parties can be held liable and which cannot. So you might say that this is a conflict that is going to live on no matter what the justices decide.

By Andrew Cohen October 8, 2007; 8:40 PM ET