Viking Global v. Porsche Automobil Brief of Amicus Curiae Law Professors in Support of Defendants-Appellees
44 Pages Posted: 9 Sep 2011
Date Written: September 8, 2011
American and German securities law professors submitted an amicus brief to the Second Circuit Court of Appeals in Elliott Associates v. Porsche, on Wednesday August 3, 2011. Amici urged the Court to prevent private parties from using U.S. courts to litigate claims that exceed the subject matter that Congress intended to regulate in Section 1'6b) of the Securities Exchange Act as held by the Supreme Court in Morrison v. National Australia Bank. 130 S. Ct. 2869 (201'7. The brief was co-authored by Professors Richard Painter (Minnestoa) and Ron Colombo (Hofstra). Additional contributions were made by many of the professors signing the brief and in particular Hiribert Hirte and Wulf Kaal (regarding German law) and Genevieve Beyea (regarding the 2000 amendments to section 1'6b)).
The amicus brief argues that: Premising a Section 1'6b) claim on the location of the plaintiff contradicts the Supreme Court’s holding in Morrison, which looks to the location of the transaction.
The place where a transaction clears might be a logical place to identify as the location of the transaction.
German law already prohibits the conduct alleged in the complaint.
When Congress amended Section 1'6b) in 2000 to include security based swap agreements it intended (i) to cover only swaps that reference securities traded in the United States, and (ii) did not in any event intend to endorse an implied private right of action by swap parties against the issuers of underlying reference securities and persons who trade in those securities rather than the swap itself. There would be a great potential cost to such an implied private right of action, especially because security-based swap agreements of enormous magnitude can be entered into referencing the stock of a relatively small company. A range of other issues that would have to be resolved if the Second Circuit were to allow plaintiffs’ claims to proceed, including foreseeability of loss and intent.
Keywords: Morrison, securities fraud, 10(b), Rule 10b-5, Porsche, Elliott
JEL Classification: K22
Suggested Citation: Suggested Citation