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http://ssrn.com/abstract=1470940
 
 

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Reading Stoneridge Carefully: A Duty-based Approach to Reliance and Third Party Liability Under Rule 10b-5


Donald C. Langevoort


Georgetown University Law Center

July 29, 2010

University of Pennsylvania Law Review, Vol. 158, 2010
Georgetown Law and Economics Research Paper No. 10-13
Georgetown Public Law Research Paper No. 10-47

Abstract:     
The Supreme Court's decision in the Stoneridge case has largely been interpreted as a imposing a strict, pro-defendant reliance requirement. This article offers an alternative reading that takes the Court's analysis more seriously than its overheated dicta, one that makes remoteness a serious and meaningful inquiry that can produce balanced and fair responses to the concern that seemed to motivate the search for restraint: fear of disproportionate liability. It explores the nature of the dispropotion, and suggests ways -- using the Court's own explanatory tools -- for deciding when third party involvement is close enough to the fraud so that fear of disproportion lessens. Among other things, this approach leads clearly to a rejection of the so-called attribution approach for liability. Recognizing that a statutory solution may be better than judicial patchwork, it also offers a coupling of expanded liability with a more rational and sensible proportionate liability regime than now exists.

Number of Pages in PDF File: 48

Keywords: securities fraud; secondary liability; reliance

JEL Classification: K00, K22

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Date posted: September 11, 2009 ; Last revised: August 10, 2010

Suggested Citation

Langevoort, Donald C., Reading Stoneridge Carefully: A Duty-based Approach to Reliance and Third Party Liability Under Rule 10b-5 (July 29, 2010). University of Pennsylvania Law Review, Vol. 158, 2010; Georgetown Law and Economics Research Paper No. 10-13; Georgetown Public Law Research Paper No. 10-47. Available at SSRN: http://ssrn.com/abstract=1470940 or http://dx.doi.org/10.2139/ssrn.1470940

Contact Information

Donald C. Langevoort (Contact Author)
Georgetown University Law Center ( email )
600 New Jersey Avenue, NW
Washington, DC 20001
United States
202-662-9832 (Phone)
202-662-9412 (Fax)
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