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Epstein on Stoneridge

Primary and Secondary Liability Under Securities Law: The Stoneridge Investment Saga. One of several possible money quotes follows:

Imposing crushing litigation burdens on second-tier defendants who receive no direct benefit from the public fraud is a heavy-handed way to improve transparency of securities markets. The expanded liability has two vices: First, it chews up huge social losses in litigation costs that detract key executives from their major jobs. Second, it leads to erroneous findings on liability rates of error whereby some innocent defendants pay large sums while some guilty parties go free. No system that costly and erratic supplies effective deterrence against fraud.