Halliburton v. Erica P. John Fund—Former Members of Congress Supporting Neither Party

Robert Giuffra is a partner in Sullivan & Cromwell’s Litigation Group. The following post is based on an amicus brief filed by Sullivan & Cromwell in the case of Halliburton Co. v. Erica P. John Fund, Inc. The Supreme Court’s expected reconsideration of Basic is also discussed in a Harvard Law School Discussion Paper by Professors Lucian Bebchuk and Allen Ferrell, Rethinking Basic, discussed on the Forum here.

Sullivan & Cromwell LLP filed an amicus brief on January 6, 2014 with the U.S. Supreme Court in the case of Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317. This brief is submitted on behalf of former members of Congress, SEC officials and congressional counsel involved in the drafting of the Private Securities Litigation Reform Act (PSLRA) of 1995. In Amgen, Justice Ginsburg, for the majority, characterized the PSLRA’s silence on the Basic fraud-on-the-market presumption as a “reject[ion]” of “calls to undo” Basic. 133 S. Ct. at 1200 (Amgen, p. 20, available here). In opposing cert in Halliburton (see brief in opposition of certiorari, pages 32-33, available here), plaintiffs referenced Congress’s silence in the PSLRA as acquiescence in Basic‘s presumption. This congressional acquiescence argument could be critical to the decision in Halliburton, which could be one of the most important securities cases in years.

As the amicus brief demonstrates, the full legislative history of the PSLRA, which was not placed before the Supreme Court by the parties or their amici in Amgen, reflects that Congress rejected calls to codify, modify or undo Basic in the PSLRA. Congress’s decision to remain silent thus indicated neither acceptance nor rejection of the Basic fraud-on-the-market theory. Rather, in the PSLRA, Congress left what to do about the Basic presumption to a future Congress or this Court.

The full text of the amicus brief is available here.

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