Breaking the Bank: Reconsidering Central Bank of Denver after Enron and Sarbanes-Oxley
25 Pages Posted: 27 Feb 2008 Last revised: 4 Mar 2008
This article argues that aiding and abetting liability should be reinstated for secondary actors in securities frauds. Such liability was eliminated by the Supreme Court's 1994 decision in Central Bank of Denver, N.A., v. First Interstate Bank of Denver, N.A. Since that decision, corporate fiascos such as Enron and Worldcom have shown the need to enhance our ability to deter fraud in the corporate marketplace. The article recognizes that the Supreme Court is unlikely to change course on this issue, and suggests that Congress should act by adding a provision the Public Company Accounting and Investor Protection Act of 2002 (commonly known as Sarbanes-Oxley, or SOX) expressly granting a private right of action for aiding and abetting liability under Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934.
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