Opinion ID: 1367722
Heading Depth: 4
Heading Rank: 1

Heading: Attribution Is Consistent with Stoneridge

Text: The Supreme Court has never directly addressed whether attribution at the time of dissemination is required for secondary actors to be liable in a private damages action brought pursuant to Rule 10b-5. Nevertheless, the Court's recent decision in Stoneridge is instructive. The Supreme Court's focus on reliance in Stoneridge favors a rule, such as attribution, that is designed to preserve that element of the private right of action available under Rule 10b-5. See Wright, 152 F.3d at 175 (noting that an attribution requirement prevents plaintiffs from circumvent[ing] the reliance requirements of the [Exchange] Act). In Stoneridge, which dealt primarily with deceptive conduct rather than false statements, the Court rejected claims brought pursuant to Rule 10b-5 against an issuing firm's customers and suppliers. 552 U.S. at 153, 128 S.Ct. 761. The Court held that plaintiffs' claims failed as a matter of law because plaintiffs could not demonstrate that they rel[ied] upon [defendants'] own deceptive conduct and because [i]t was [the issuing firm] Charter, not [defendants], that misled its auditor and filed fraudulent financial statements. Id. at 160-61, 128 S.Ct. 761 (emphasis added); id. at 159, 128 S.Ct. 761 (Reliance by the plaintiff upon the defendant's deceptive acts is an essential element of the § 10b private cause of action. (emphasis added)). We think that reasoning is consistent with an attribution requirement in the context of claims based on false statements. If a plaintiff must rely on a secondary actor's own deceptive conduct to state a claim under Rule 10b-5(a) and (c), it stands to reason that a plaintiff must also rely on a secondary actor's own deceptive statementsand not on statements conveyed to the public through another source and not attributed to the defendantto state a claim under Rule 10b-5(b). More generally, Stoneridge stands for the proposition that reliance is the critical element in private actions under Rule 10b-5. This general proposition, applied to the specific issue of secondary actor liability, further supports an attribution requirement. Attribution is necessary to show reliance. Where statements are publicly attributed to a well-known national law or accounting firm, buyers and sellers of securities (and the market generally) are more likely to credit the accuracy of those statements. Because of the firm's imprimatur, individuals may be comforted by the supposedly impartial assessment and, accordingly, be induced to purchase a particular security. Without explicit attribution to the firm, however, reliance on that firm's participation can only be shown through an indirect chain . . . too remote for liability. Stoneridge, 552 U.S. at 159, 128 S.Ct. 761.