Today's the Day!

It's here, folks - October 9th. Today is the day that the Stoneridge case (No. 06-43) will be heard in the Supreme Court. While you can't be a fly on the wall, you can still read the argument transcripts. The transcripts are posted same-day on the Supreme Court's website, so check that site later today. Stay tuned for the court's decision.

Stoneridge is an important case, which is why you've been hearing a lot about it lately. Two good articles to peruse:

"Enron Investors Banking on High Court," from the AP, focuses on the Enron case before the court which will be affected by the Stoneridge opinion. (The court has considered Enron but not issued a decision as to whether the case will be heard.) The article highlights an important consideration: who is responsible for reporting financial problems to shareholders. In other words, if a company's bank is aware of financial problems, are they responsible for alerting shareholders? When is inactivity equal to "deception"? This is a fascinating legal question. The Stoneridge decision should give more guidance to banks, lawyers, accountants, and others who regularly have detailed knowledge of corporations' financial states. Ultimately, the decision may affect the ability of Enron investors to recover from banks which advised Enron.

From Legal Times, "In 'Stoneridge,' the Supreme Court Should Focus on Who Really Gains" is an interesting viewpoint of how securities fraud laws should be structured based on the true winners in the fraud. The author demonstrates that it is ultimately the investors who lose in almost all securities fraud litigation, and often the only "winners" are the lawyers. His proposed solution is very thought-provoking: "The bottom line is that investors would gain if securities fraud litigation were limited to derivative actions on behalf of the securities issuer, with any damages recovered from the culprits to be paid only to the company. Of course, the SEC would still be free to pursue enforcement actions."