NAM Amicus Brief in Stoneridge Case Warns Against Expansion of Securities Litigation

08/15/07 -  07-207                                                                                    
CONTACTS:
J.P. FIELDER (202) 637-3089
QUENTIN RIEGEL (202) 637-3058

FOR IMMEDIATE RELEASE

Foresees “Indiscriminate Search For Deep Pockets”

WASHINGTON, D.C., August 15, 2007 – The National Association of Manufacturers today filed an amicus brief asking the U.S. Supreme Court to uphold a decision by the U.S. Court of Appeals for the Eighth Circuit in Stoneridge Investment Partners v. Scientific-Atlanta that reaffirmed the long-standing parameters of liability in securities fraud litigation.

Section 10 (b) of the Securities Exchange Act of 1934 outlaws the use of deceptive or misleading information made “in connection with the purchase or sale of any security,” but as construed by the Court, limits liability to persons who make disclosures to investors, owe investors a specific fiduciary duty or engage in insider trading.

“The petitioner in Stoneridge is trying to persuade the High Court to overturn decades of established law and greatly expand potential liability,” said Quentin Riegel, Vice President for Litigation and Deputy Legal Counsel for the National Association of Manufacturers. “The law makes clear, and the Supreme Court has affirmed, that one cannot be held liable under Section 10(b) for engaging in deceptive conduct without having breached a duty to investors.

“The key issue in this case is primary liability,” Riegel said. “Without question, a company must give accurate information about its own stock. But the actions of third parties are not covered by this provision of the law. Plaintiffs’ attorneys are not empowered to sally forth beyond the law in an indiscriminate search for deep pockets.”

Riegel said that “Congress made clear its intent to keep Section 10(b) confined to market actors and market-directed activities, not to expand it to manufacturers or others who simply do business with a market actor. If the petitioner prevails in this case, it will open the floodgates for litigation and have a chilling effect throughout our economy.  It also will amount to a reversal of Central Bank, in which the High Court held that only the SEC could bring an action for aiding and abetting a primary securities violation.”

The NAM amicus brief in the case will be posted at /briefs. Oral argument is scheduled for October 9, 2007.

-NAM-

The National Association of Manufacturers is the nation’s largest industrial trade association, representing small and large manufacturers in every industrial sector and in all 50 states. Headquartered in Washington, D.C., the NAM has 11 additional offices across the country. Visit the NAM’s award-winning web site at www.nam.org for more information about manufacturing and the economy.