Liability for Secondary Actors

Since 1994, private plaintiffs have been barred from bringing securities fraud claims under Section 10(b) and Rule 10b-5 (or aiding and abetting claims) against defendants who did not make, author, adopt, or have attributed to them a false or misleading statement. In 2009, this prohibition, which began with the Supreme Court’s decision in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994), appeared to be under serious threat of being repealed on two fronts: by appellate court interpretation at the behest of the SEC and by legislative action. If these efforts were successful, the scope of securities lawsuits that could potentially survive a motion to dismiss would be significantly broadened, especially for auditors, attorneys, and other groups that provide professional services to issuers.