Stoneridge Investment Partners v. Scientific-Atlanta, Inc.

Stoneridge Investment Partners v. Scientific-Atlanta, 552 U.S. 148 (2008), was a decision by the United States Supreme Court pertaining to the scope of liability of secondary actors, such as lawyers and accountants, for securities fraud under the Securities Exchange Act of 1934. In a 5-3 decision authored by Justice Anthony M. Kennedy, the Court held that "aiders and abettors" of fraud cannot be held secondarily liable under the private right of action authorized by §10(b) of the Exchange Act. Such defendants can only be held liable if their own conduct satisfies each of the elements for §10(b) liability. Therefore, the plaintiff must prove reliance, in making a decision to acquire or hold a security, upon a material misrepresentation or omission by the defendant.

Stoneridge Investment Partners v. Scientific-Atlanta
Supreme Court of the United States
Argued October 9, 2007 Decided January 15, 2008
Full case name	Stoneridge Investment Partners, L.L.C., Petitioner v. Scientific-Atlanta, Inc., et al.
Docket no.	06-43
Citations	552 U.S. 148 (more) 128 S. Ct. 761; 169 L. Ed. 2d 627; 2008 U.S. LEXIS 1091; 76 U.S.L.W. 4039; Fed. Sec. L. Rep. (CCH) ¶ 94,556; 21 Fla. L. Weekly Fed. S 46
Case history
Prior	Certiorari to the United States Court of Appeals for the Eighth Circuit
Holding
The private right of action under §10(b) of the Securities Exchange Act of 1934 does not extend to aiders and abettors. Because the conduct of a secondary actor must therefore satisfy each of the elements for §10(b) liability, the plaintiff must prove reliance upon a material misrepresentation or omission by the defendant.
Court membership
Chief Justice John Roberts Associate Justices John P. Stevens · Antonin Scalia Anthony Kennedy · David Souter Clarence Thomas · Ruth Bader Ginsburg Stephen Breyer · Samuel Alito
Case opinions
Majority	Kennedy, joined by Roberts, Scalia, Thomas, Alito
Dissent	Stevens, joined by Souter, Ginsburg
Breyer took no part in the consideration or decision of the case.
Laws applied
Section 10(b) of the Securities Exchange Act.

Stoneridge was recognized by The New York Times as the "most important securities fraud case in years," and also commented by Wall Street Journal, Forbes, and Business Week.

See also

• Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A. (1994)

Further reading

• Edison, Andrew (2008). "The Stoneridge case – much ado about nothing?". Journal of Investment Compliance. 9 (1): 5–9. doi:10.1108/15285810810859243.
• Souza, Travis S. (2008). "Freedom to Defraud: Stoneridge, Primary Liability, and the Need to Properly Define Section 10(b)". Duke Law Journal. 57: 1179–1207.
• Walter, David (2008). "Developments in US Securities Litigation: The Decision in Stoneridge Investment Partners v Scientific-Atlanta". Journal of International Banking Law. 23 (5): 267–270. ISSN 0267-937X.