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January 15, 2008

Could SCOTUS securities fraud ruling help white-collar defendants?

According to this post at SCOTUSblog, the Supreme Court this morning issued one opinion, ruling 5-3 in Stoneridge Investment Partners v. Scientific-Atlanta (06-43) "that fraud claims are not allowed against third parties that did not directly mislead investors but helped those who did." 

Even though Stoneridge is a civil securities fraud case, I cannot help but wonder if the opinion (available here) might have any themes or language that could indirectly impact sentencing determinations (on issues like loss) in some criminal securities fraud cases.  Of course, experts in this complicated arena are highly encouraged to chime in.

UPDATE: After a quick read of Stoneridge, I do not see much specific language that will warm a white-collar defense attorney's heart.  However, the thematic concerns of federalism and over-regulation that find some expression of Justice Kennedy's opinion for the Court might be developed effectively in the right kind of federal sentencing proceeding.

January 15, 2008 at 10:14 AM | Permalink


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My initial reaction is *no*. It was worded in such a way, that, at best, it restricts the private rights of action.

But it also means that Kennedy wrote this opinion, and therefore won't be writing some other, more important opinion.

Posted by: S.cotus | Jan 15, 2008 12:30:22 PM

S. cotus seems right. The case is mostly about the extent to which the courts will read a private right of action into a statute (e.g. Cort v. Ash and similar cases). There is some discussion of the general policy underlying the 1934 Act, but mostly in the context of what Congress wanted to allow in the way of civil actions.

Posted by: | Jan 15, 2008 12:47:14 PM

I am a 1987 graduate of U.Va. Law School, and practiced in Atlanta until January 2000, when I went to federal prison. See, U.S. v. Bollin, Gormley & Tietjen, 264 F.3d 391 (4th Cir.2001). I filed a 2255 habeas corpus motion in April 2003, but my district judge did not deny it until 6/23/06, 3 days after we filed a Petition for a Writ of Mandamus against him at the 4th Circuit. He granted me a C.O.A., and my appeal is now pending at the Fourth Circuit. United States v. James Gormley, Docket No. 06-7645. I completed my prison sentence and was released from the B.O.P. on 9/7/07. I filed my Opening Informal Brief on 10/5/07. The Government has waived the right to file any Response Brief, so I don't have a right to file a Reply Brief, althought I have filed two Rule 28(j) Letters of Supplementary Authorities. My expert witness is Prof. Stephen A. Saltzburg of George Washington Univ. Law School, who you probably know. Stoneridge is one of the additional cases that I have cited to the Court, along with United States v. Mintmire, a recent 11th Circuit case. There are two cases I have cited in my brief that you might want to review in connection with the Stoneridge Supreme Court decision: (1)United States v. Beckner, 134 F.3d 714, 718-21 (5th Cir.1998)(a criminal scurities fraud case against an attorney) and Schatz v. Rosenberg, 943 F.2d 485 (4th Cir.1991), a civil securities fraud case against a law firm. See also, United States v. Casperson, 773 F.2d 216, 222-24 (8th Cir.1985), which basically summarizes the issue set forth in my Habeas Appeal. Would you be willing to review my appellate brief if I send you a copy? This issue is important to the entire legal profession, not just to me personally. Thanks for your time and consideration.

Posted by: james j. gormley | Jan 20, 2008 6:31:31 PM

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