Professor Bainbridge...on law, politics, religion, culture & food

The W$J on Stoneridge

The W$J provides a detailed background article on Stoneridge v. Scientific-Atlanta and scheme liability under Rule 10b-5. Plus an editorial arguing that “if the Supreme Court reverses and allows the suit to go ahead, it will open the flood gates on the next class-action bonanza,” and noting that:

Solicitor General Paul Clement filed a brief supporting dismissal of the suit. The New York Stock Exchange and Nasdaq have also filed briefs, arguing that such suits would make a difficult U.S. legal environment even less attractive to foreign investors and companies.

The difficulty would lie in the impossibility of knowing who among your customers and suppliers might be doing something shady. Sure, one can imagine corporate lawyers coming up with a raft of new forms, waivers and contracts in which all would promise they were not engaged in accounting fraud using your widgets. But aside from goosing the billable hours at white-shoe law firms, it’s hard to see how that would do anyone any good. What’s more, it probably still wouldn’t prevent a lawsuit.

My interview with Hugh Hewitt about Stoneridge is online here.