A Different View of Stoneridge; and Chairman Cox on Sovereign Wealth Funds

This post is from John F. Olson of Gibson, Dunn & Crutcher LLP.

a) The Supreme Court’s Stoneridge decision has received a lot of attention. On this blog, it was summarized here and commented on here. For those who know this Court and who heard the oral argument, the decision is unsurprising. Justice Kennedy’s opinion, however, is broader than necessary to reach the result. He is telling the lower courts, ‘Don’t mess with my Central Bank decision. Most of us up here don’t like implied private rights of action and we’re not going to let the lower courts find ways to expand them.’

Kennedy’s opinion does give plaintiffs some hope. Following the Solicitor General’s brief, the Court does say that non-verbal conduct can be fraud and thus “a wink and a nod” can still get secondary actors in trouble. What is clear is that this Court, like many thoughtful academics, has become highly skeptical of the honesty, cost effectiveness and real value to investors of our class action litigation system. The greed and sleazy ethics of some of the “private attorneys general” of the plaintiffs bar have put the whole class action system in disrepute. A majority of living former SEC Chairmen and a number of other former Commissioners and former academics had filed an amicus curiae brief in the case supporting the decision reached by the Supreme Court on Tuesday. The brief was prepared by colleagues of mine, whose summary of the case can be found here.

b) I’m also posting another too little noticed speech by Cox, delivered a month ago in Washington, in which he discusses the growing concerns with the role of sovereign wealth funds and government-affiliated public companies in global securities markets and the impact of such government-related concentrations of capital, and related market influence, on corporate ethics and policy, transparency and the integrity of financial reporting. What about the values of corporate governance, and shareholder power, when the controlling interest or “golden share” is held by a government, particularly a government that itself does not practice transparency or tolerate democracy as we know it?

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