If Tony Soprano agrees to take delivery of boxes containing nothing but thousands of bricks so that the "seller" can falsely represent on its financial statements that it sold him hundreds of computers, has Tony joined in the seller’s fraud?
The Bush administration would say no. Despite a request by the Securities and Exchange Commission, it refused this week to support investors’ claims against facilitators, like Tony, of fraudulent schemes to pump up the price of securities. The President himself rejected the SEC’s advice. See today’s Washington Post story here.
The administration’s decision relates to a case pending before the U.S. Supreme Court — StoneRidge Inv. Partners, LLC v. Scientific-Atlanta, Inc., No. 06-43 (Brief for Petitioner available here). The outcome in StoneRidge will affect other pending cases, including the Fifth Circuit’s decertification in March 2007 of a class of Enron investors. See post with multiple links here.