Broader Liability in Securities Fraud Cases

The Supreme Court has agreed to consider whether shareholders of companies that commit securities fraud can sue third parties, called secondary actors, which may have participated in the fraud, a case which has at minimum significant implications for parts of the professional liability insurance business (see here and here). In simple terms, the key issue is whether third parties that aided and abetted a fraud, even unwittingly, should be liable to shareholders. The secondary actors typically include investment banks and…

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