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| Source: CNBC.com |
The U.S. Supreme Court determined yesterday the Securities
Litigation Uniform Standards Act (“SLUSA”) does not prevent Ponzi scheme
victims from seeking redress against third parties who worked with a Ponzi schemer,
when the nature of the scheme does not involve securities within the ambit of
the Act. SLUSA bars state-law claims
when alleged misrepresentations and/or omissions are made "in connection
with" purchase(s) or sale(s) of any security(ies) listed on any U.S. national
exchange(s) when the alleged misconduct was committed. (Sir) Allen Stanford was convicted of
swindling investors with fake CDs issued by Stanford International Bank, an
Antigua-based financial front institution which he controlled.
For the SEC, it means the Court did not curtail its ability to enforce securities laws, for Proskauer Rose LLP, and others, it means they now face prospective civil liability for their alleged role(s) in facilitating Stanford’s $7.5B fraud, for which he was sentenced to 110 years of incarceration. Tom Goldstein, a lawyer representing the former Stanford clients and founder of SCOTUSBlog.com, told Reuters, "It's clear the justices understood that ruling for the defendants would create an immunity that Congress never imagined."
Justice Stephen Breyer wrote the opinion of the 7-Justice majority, noting that because the phony CDs were never traded on U.S. exchanges, "it is difficult to see why the federal securities laws would be - or should be - concerned with shielding such entities from lawsuits." Representatives for the implicated law firms maintained they would move to dismiss the suit on other grounds when the case is remanded.
Read more about the cases at Reuters.
For the SEC, it means the Court did not curtail its ability to enforce securities laws, for Proskauer Rose LLP, and others, it means they now face prospective civil liability for their alleged role(s) in facilitating Stanford’s $7.5B fraud, for which he was sentenced to 110 years of incarceration. Tom Goldstein, a lawyer representing the former Stanford clients and founder of SCOTUSBlog.com, told Reuters, "It's clear the justices understood that ruling for the defendants would create an immunity that Congress never imagined."
Justice Stephen Breyer wrote the opinion of the 7-Justice majority, noting that because the phony CDs were never traded on U.S. exchanges, "it is difficult to see why the federal securities laws would be - or should be - concerned with shielding such entities from lawsuits." Representatives for the implicated law firms maintained they would move to dismiss the suit on other grounds when the case is remanded.
Read more about the cases at Reuters.
