2nd Circ. Lowers Bar For SEC Claims Against Fraud Abettors

Law360, New York (August 8, 2012, 3:23 PM EDT) -- The U.S. Securities and Exchange Commission is not required to prove that a defendant directly caused injuries in a securities fraud in order to bring claims for aiding and abetting fraud, the Second Circuit ruled Wednesday in a precedential decision that experts called a boon to the agency.

A three-judge panel effectively lowered the bar for the SEC in cases where it seeks to prove that a defendant “substantially assisted” an existing fraud, in addition to knowing about the fraud.

The appeals court drew on a...
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