Secondary Liability Through The Back Door

Law360 (November 11, 2009, 12:28 PM EST) -- The U.S. Securities and Exchange Commission recently filed an amicus curiae brief that, in effect, seeks to breathe new life into aiding and abetting claims in private actions brought under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.

The United States Supreme Court held in Central Bank of Denver NA v. first Interstate Bank of Denver NA, 511 U.S. 164 (1994), that there is no secondary liability in private Section 10(b) actions. Rather, defendants must themselves make false or misleading statements to be liable.

As has been widely reported, Sen. Arlen Specter, D-Pa., has introduced...

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