Justice Stevens and the Federal Securities Laws

Articles have begun to speculate that Justice Stevens is ready to announce his resignation from the Supreme Court.  The speculation is based his hiring of a single clerk, rather than the usual four.  Retired Justices apparently get one clerk.

Justice Stevens has been on the Court for 33 years.  As such, he has been involved in all of the critical securities cases decided in recent years.  Justice Stevens has been a steady, often impassioned, supporter of shareholder and investor rights.  He wrote the majority opinion in Zandford, overturning a Fourth Circuit decision attempting to restrict fraud actions through a narrow definition of the "in connection with" requirement.  But his strongest voice was often in dissent in some of the worst investor protection decisions during the period.  

He dissented in Central Bank, disagreeing with the elimination of aiding and abetting liability and again in Stoneridge, the case that arbitrarily restricted the reach of Rule 10b-5 to vendors and other third parties.  He dissented in Lampf, the case that imposed a federal limitations period on private actions under Rule 10b-5 and chose an abismally short one year, three year period. 

While in dissent, he may have the last laugh.  He was largely vindicated in Lampf with the decision by Congress in SOX to adopt a longer period of limitations.  He may also be vindicated in Central Bank, with legislative proposals recently introduced to reinstate secondary liability.  

In any event, if he steps down, investors and shareholders will lose a true advocate.  Hopefully the Administration will find someone of comparable views. 

Comments

[Herrick Lidstone]

With the many other issues facing this administration, I doubt that protection of shareholder rights will be high on President Obama's list of things to vet.