August 14, 2007

Chairman Dodd calls on President, Solicitor General to endorse SEC position in Stoneridge Case

Discourages Plans to File Brief in Opposition to SEC Support of Scheme Liability

Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, today sent letters to President Bush and Solicitor General Paul Clement to convey his disappointment that the Solicitor General chose not to file a brief with the Supreme Court expressing the views recommended by the U.S. Securities and Exchange Commission (SEC) in the case of Stoneridge Investment Partners LLC v. Scientific-Atlanta, Inc., et al, which is scheduled to come before the Court this fall. Dodd also urged the President and Solicitor General Clement not to file a brief in opposition to the views of the SEC. “It has been reported that the Solicitor General plans to file an amicus brief advocating views inconsistent with the views of the SEC,” Dodd wrote in his letter to President Bush. “If this occurs, it would compound the damage already caused by the Solicitor in declining to advocate a position consistent with the SEC’s. I urge you to take appropriate steps to discourage any such plans.” 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.
The full text of the letter is to President Bush is available here. The full text of the letter is to Solicitor General Clement is available here.