In today’s Wall Street Journal op-ed page, SEC Commissioner Paul Atkins (no relation to DC Dicta) said that the Stoneridge decision was not anti-investor. Contrarily, he said, Stoneridge protects investors from the real enemy: trial attorneys.
“Is this proof that the court is insensitive to victimized investors? Hardly,” Atkins wrote. “It is the mark of a court that insists on predictability and the rule of law — principles that are fundamental to the protection of investors and success of their investments. Although some have called Stoneridge ‘anti-investor,’ the Supreme Court’s decision actually protects shareholders from creative and unpredictable new ways to extract large settlements, which always include an ample portion for the lawyers.”
He also said investors should not fret over the fact that they can’t sue third party actors under federal securities laws in situations like Stoneridge and Enron. The SEC, he said, has their backs.
“The SEC has tremendous leverage to obtain settlements and assert novel bases of liability in court. But the SEC must resist efforts — internal or external — to broaden securities laws beyond their existing boundaries, even when those efforts are driven by a desire to see harmed shareholders recompensed,” Atkins wrote. “By respecting legal boundaries and not ‘pushing the envelope,’ the SEC provides predictability to investors, individuals and companies as to unacceptable conduct.”
Atkins must of been on the losing side of the SEC’s 3-2 vote back in June to ask the Justice Department to support the investors in the case. After urging from the White House, Solicitor General Paul Clement instead filed a brief supportig the companies.
HT: WSJ Law Blog