SEC Commissioner Voices Opposition to Scheme Liability in Fordham Speech

Paul S. Atkins, commissioner with the Securities and Exchange Commission, visited Fordham Law School in October. Photo by Ben Asen

In a speech at Fordham University Law School on Oct. 9, Securities and Exchange Commissioner Paul S. Atkins said he is opposed to so-called scheme liability, or the ability of shareholders to sue third parties, such as investment banks and law firms, for another company’s fraud.

Atkins, the guest speaker at the annual A.A. Sommer Jr. lecture, came on the same day as an op-ed article he wrote appeared in the Wall Street Journal. In it, he outlined his views on a case before the Supreme Court, Stoneridge Investment Partners v. Scientific-Atlanta, that could decide whether shareholders are allowed to sue the law firms or banks. Attorneys and financial institutions like banks have been protected by a 1994 Supreme Court decision that says shareholders cannot recover money from firms and people who simply “aided or abetted” securities fraud.

Atkins told the gathering at McNally Amphitheatre that the stakes in the case, considered one of the most important securities cases in years, are very high.

“It could have huge repercussions,” Atkins said. “It could open up a huge potential liability. Sometimes, the urge to settle is stronger than it is to vindicate your rights. That could end up hurting the American economy.”

The annual lecture was established by Morgan, Lewis & Bockius, LLP, in honor of former partner, A. A. Sommer Jr., who served as an SEC commissioner from 1973 to 1976.

Atkins said Sommer, who he once worked with at the SEC, was “a great advisor” who was “immensely kind.”

“The SEC has seen many commissioners come and go in its 73 years, but I’m sure that even the newest securities practitioners have heard of Al Sommer Jr. and his legacy at the commission,” Atkins said. “Commissioner Sommer was extremely well regarded for his efforts to eliminate fixed commissions in the brokerage industry and his work in creating and overseeing an advisory committee on corporate disclosure.”

Biography of Investigative Journalist I.F. Stone Wins Sperber Award

In 1964, nearly every journalist in the country reported President Lyndon Johnson’s assertion that two American Navy destroyers had been attacked in an event that came to be known as the Gulf of Tonkin incident, which effectively drew the country into the Vietnam War. But I.F. Stone, a former Philadelphia Inquirer reporter and editor at The Nation, was the lone holdout, and it was that tenacity and skepticism that would thrust him into the media spotlight.

And he is back in the spotlight again, as author Myra MacPherson’s biography, All Government’s Lie! The Life of and Times of Rebel Journalist I.F. Stone (Scribner, 2006), has been chosen to receive the Ann M. Sperber Biography Award, which is given annually by Fordham University for a biography or autobiography of a journalist or other media figure.  

Albert Auster, Ph.D., associate chair of the Department of Communication and Media Studies, said the vote by a five-member jury was unanimous. Auster said he once subscribed to I.F. Stone’s Weekly, which Stone published from 1953 to 1971, calling it the perfect example of the kind of investigative journalism needed today.

He said MacPherson’s biography is a welcome addition to the literature of how radical political discourse is carried on in the United States.

For Auster, there is a direct line from Stone’s newsletter to Bob Woodward and Carl Bernstein’s Watergate expose in the Washington Post to bloggers on the Internet today.

“Nowadays, we have hundreds of bloggers who have never heard of Stone but owe what they do to the tradition of what he did,” he said.

The Sperber award was established in 1999 with a gift from Liselotte Sperber, in memory of her daughter Ann M. Sperber, who wrote the Pulitzer Prize nominated biography of Edward R. Murrow, Murrow: His Life and Times (Fordham University Press, 1998). The award will be presented to MacPherson at a ceremony on Nov. 27 at 6:30 p.m. in the 12-Floor Lounge, Lowenstein Center, Lincoln Center campus.