SEC v. Central Bank: A Draft Opinion for the Court's Conference

In April 1994, the United States Supreme Court held that section 10(b) of the Exchange Act of 1934 does not create aiding and abetting liability. The action, Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A.y involved private parties suing under the section 10(b) implied right of action. After Central Bank, the Securities and Exchange Commission has dismissed most of its aiding and abetting claims and requested that Congress amend section 10(b), but is pursuing a small number of test cases in which it maintains that the decision does not apply to its enforcement actions under the existing statute. Simon M. Lome, General Counsel of the SEC, presented a hypothetical opinion to that effect in the August 1994 issue of The Business Lawyer, and three other symposium articles commented on the questions and problems raised by the Central Bank decision. Messrs. Brewer and Latham, who are counsel of record to an individual aiding and abetting defendant in a test case in the Eleventh Circuit and the Northern District of Georgia, present a contrary hypothetical opinion explaining why, after Central Bank, the SEC may not pursue aiding and abetting claims under the existing section 10(b).