Source: https://case-law.vlex.com/vid/552-u-s-148-606025790
Timestamp: 2019-04-24 09:51:42+00:00

Document:
552 U.S. 148 (2008), 06-43, Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc.
Party Name: STONERIDGE INVESTMENT PARTNERS, LLC, Petitioner, v. SCIENTIFIC-ATLANTA, INC., et al.
Alleging losses after purchasing Charter Communications, Inc., common stock, petitioner filed suit against respondents and others under §10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission (SEC) Rule 10b-5. Acting as Charter's customers and suppliers, respondents had agreed to arrangements that allowed Charter to mislead its auditor and issue a misleading financial statement affecting its stock price, but they had no role in preparing or disseminating the financial statement. Affirming the District Court's dismissal of respondents, the Eighth Circuit ruled that the allegations did not show that respondents made misstatements relied upon by the public or violated a duty to disclose. The court observed that, at most, respondents had aided and abetted Charter's misstatement, and noted that the private cause of action this Court has found implied in §10(b) and Rule 10b-5, Superintendent of Ins. of N. Y. v. Bankers Life & Casualty Co., 404 U.S. 6, 13, n. 9, 92 S.Ct. 165, 30 L.Ed.2d 128, does not extend to aiding and abetting a §10(b) violation, see Central Bank of Denver, N. A. v. First Interstate Bank of Denver, N. A., 511 U.S. 164, 191, 114 S.Ct. 1439, 128 L.Ed.2d 119.
The §10(b) private right of action does not reach respondents because [128 S.Ct. 764]Charter investors did not rely upon respondents' statements or representations. Pp. 156-157.
(a) Although Central Bank prompted calls for creation of an express cause of action for aiding and abetting, Congress did not follow this course. Instead, in §104 of the Private Securities Litigation Reform Act of 1995 (PSLRA), it directed the SEC to prosecute aiders and abettors. Thus, the §10(b) private right of action does not extend to aiders and abettors. Because the conduct of a secondary actor must therefore satisfy each of the elements or preconditions for §10(b) liability, the plaintiff must prove, as here relevant, reliance upon a material misrepresentation or omission by the defendant. Pp. 156-158.
doctrine, reliance is presumed when the statements at issue become public. Neither presumption applies here: Respondents had no duty to disclose; and their deceptive acts were not communicated to the investing public during the relevant times. Petitioner, as a result, cannot show reliance upon any of respondents' actions except in an indirect chain that is too remote for liability. P. 159.
publicly traded company under U.S. law, and shifting securities offerings away from domestic capital markets. Pp. 159-164.
KENNEDY, J., delivered the opinion of the Court, in which ROBERTS, C. J., and SCALIA, THOMAS, and ALITO, JJ., joined. STEVENS, J., filed a dissenting opinion, in which SOUTER and GINSBURG, JJ., joined, post, p. 167. BREYER, J., took no part in the consideration or decision of the case.
Stanley M. Grossman argued the cause for petitioner. With him on the briefs were Marc I. Gross and Joshua B. Silverman.
Stephen M. Shapiro argued the cause for respondents. With him on the brief were Andrew J. Pincus, Timothy S. Bishop, John P. Schmitz, Charles Rothfeld, J Brett Busby, Oscar N. Persons, Susan E. Hurd, Stephen M. Sacks, and John C. Massaro.
Deputy Solicitor General Hungar argued the cause for the United States as amicus curiae urging affirmance.
a misleading financial statement affecting the stock price. We conclude the implied right of action does not reach the customer/supplier companies because the investors did not rely upon their statements or representations. We affirm the judgment of the Court of Appeals.

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