US Securities and Exchange Commission moves to further limit liability for corporate fraud

According to an article published in the New York Times Tuesday, the SEC has filed a brief in a Supreme Court case urging the court to adopt a legal standard that would make it more difficult for shareholders to win lawsuits charging corporations and executives with fraud. The agency is also considering placing caps on the liability of accounting firms for facilitating fraud.

The SEC is the federal agency responsible for administering securities laws and overseeing corporate regulation.

In the Supreme Court case, Tellabs Inc. v. Makor Issues & Rights Ltd, the SEC has filed a brief urging the court to adopt a narrow interpretation of the Private Securities Litigation Reform Act of 1995—the law that is the basis for investor lawsuits against corporations for fraud. The law requires that “in any private action arising under this title in which the plaintiff may recover money damages only on proof that the defendant acted with a particular state of mind, the complaint shall . . . state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.”

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http://wsws.org/articles/2007/feb2007/secu-f14.shtml