Supreme Court Decisions Survive Senate Action on Financial Reform

Three key Supreme Court decisions, including one rejecting liability for lawyers, accountants and bankers who aid and abet in the violation of securities laws, survived attempts to overturn them during the Senate's consideration of landmark financial reform legislation. Despite support from a coalition of consumer, investor, labor and other groups, an amendment targeting two of the decisions failed to reach a vote before the lawmakers moved Thursday night to halt cloture debate and take a final vote on the reform bill.

Marcia Coyle

The National Law Journal

2010-05-21 12:00:00 AM

Three key Supreme Court decisions, including one rejecting liability for lawyers, accountants and bankers who aid and abet in the violation of securities laws, survived attempts to overturn them during the Senate's consideration of landmark financial reform legislation.

Despite support from a coalition of consumer, investor, labor and other groups, an amendment targeting Stoneridge Investment v. Scientific-Atlanta (2008) and Central Bank N.A. v. First Interstate Bank N.A. (1994) failed to reach a vote before the lawmakers moved late Thursday night to halt 30 hours of cloture debate and take a final vote on the reform bill.

The two decisions rejected the private right of action for aiders and abettors of security violations because Congress had not explicitly stated its intent to include it in the relevant statute. In Stoneridge, the Court said, "The decision to extend the cause of action is thus for the Congress, not for this Court."

The amendment, sponsored by Sen. Arlen Specter, D-Pa., and 11 other Democrats, had drawn heavy opposition from the U.S. Chamber of Commerce.

A vote was taken on an amendment to overturn another Supreme Court decision — the 1978 ruling in Marquette National Bank of Minneapolis v. First of Omaha Service Corp. The justices ruled in that case that the 1863 National Bank Act preempted state interest rate regulation. The decision triggered the relocation of national banks to states lacking interest rate limits.

The amendment by Sen. Sheldon Whitehouse, D-R.I., would have changed the law to make clear that credit card companies and other national bank lenders — no matter where in the country they are located — must abide by the interest rate limits of the states in which their customers reside.

The Senate defeated the amendment, 60-35, on May 19.

Congress now will proceed to reconcile the Senate reform bill with a House package approved last December on a vote of 223-202.

Marcia Coyle can be contacted at mcoyle@alm.com.