August 16, 2007

Chairman Dodd Expresses Dissapointment with Administration Decision to Reject SEC Position in Stoneridge Case

Washington, D.C. – Senator Chris Dodd, D-Conn., Chairman of the Senate Committee on Banking, Housing and Urban Affairs, today reacted to the Administration’s decision to reject the recommendations of the Securities and Exchange Commission (SEC) and instead file an amicus brief with the Supreme Court on behalf of companies involved in the case of Stoneridge Investment Partners LLC v. Scientific-Atlanta, Inc., et al.
    “I’m very disappointed by the decision by the Administration to reject the recommendations of the SEC, which is the regulatory agency with expertise in protecting investors and maintaining the integrity of the financial markets. It is simply unacceptable for the Administration to advocate positions other than the well-established position of the Commission that parties who contribute to defrauding investors should be held accountable.”
At issue in the Stoneridge case is whether and under what circumstances a plaintiff should be allowed to receive monetary relief not only from a company that commits securities fraud, but also from a third party that participates in a fraudulent scheme. Chairman Dodd wrote to SEC Chairman Christopher Cox in May to inquire whether the SEC would continue its support of “scheme liability” in the Stoneridge case, and to voice his endorsement of the SEC’s position. In a written response, Chairman Cox confirmed that the SEC recommended to the Solicitor General that he file a brief in support of the plaintiffs in the Stoneridge case, but Solicitor General Clement has thus far declined to do so. This week, Chairman Dodd wrote to the President and to Solicitor General Paul Clement to urge that they endorse the SEC position in the Stoneridge case.