Parent Cos. May Be Liable In Fraud Suits: 11th Circ.

Law360, New York (May 5, 2008, 12:00 AM EDT) -- In deciding on an issue of first impression, an appeals court has ruled that parent companies that control primary parties in an alleged securities fraud may be held jointly and severally liable for the damages caused.

A three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit decided Wednesday that Section 20(a) of the Securities Exchange Act of 1934 exists even though the Private Securities Litigation Reform Act of 1995 was passed, a decision that may clarify the law.

A plaintiff attorney in the...
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