The Stoneridge Investment Partners decision: what difference has it made?

On January 15, 2008, the Supreme Court issued its much-anticipated opinion in Stoneridge Investment Partners LLC v. Scientific-Atlanta, Inc. In a 5-3 decision, the Court affirmed the prior decision of the Eighth Circuit, holding that so-called scheme liability claims under § 10(b) of the Securities Exchange Act of 1934 against certain non-speaking defendants were properly dismissed. Specifically, the Supreme Court stated that the implied private right of action for shareholders under § 10(b) could not reach non-speaking defendants when the investors at issue did not rely on any statements made by those defendants. Not surprisingly, traditional secondary actor defendants, such as banks, law firms, and accounting firms, have benefited significantly from this ruling. In the past, such entities may have been sued along with their public company clients in securities fraud class actions. The Supreme Court acknowledged in Stoneridge that the SEC alone was authorized to bring aiding and abetting claims under § 10(b).42 Yet, in the wake of Stoneridge, the question remained whether the decision would have an effect on the SEC's ability to prosecute claims for primary liability under § 10(b). Stoneridge nevertheless makes clear that a private plaintiff, whether suing individually or on behalf of a putative class, must fully and completely comply with the reliance requirement in order to survive a motion to dismiss.