In Stoneridge Investment Partners LLC v. Scientific-Atlanta Inc., 1 the U.S. Supreme Court held that third parties who do nothing more than transact business with an issuer can not be liable to the issuer’s investors under §10(b) of the Securities Exchange Act and Rule 10b-5 in the absence of any public statement or other conduct by those third parties on which the investors could have relied.
The Court’s holding in Stoneridge seemed to put to rest the question of “scheme liability,” that is, whether securities fraud liability could be predicated solely on a third party’s participation in a fraudulent scheme, a question that a number of lower courts had answered in the affirmative. Since then, lower courts have applied Stoneridge broadly with mostly consistent results.
