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Eyebrows Raised By SEC’s High Court Brief

Martinek Paul J. | March 6, 2007

The Securities and Exchange Commission raised a few eyebrows recently when it filed a friend-of-the-court brief urging the U.S. Supreme Court to adopt an extremely tough standard that plaintiffs would have to meet when they try to sue public companies for fraud.

Although some lawyers defend the SEC’s decision to file the brief, others question the wisdom of the Commission siding with the companies it regulates on a legal issue that has no direct impact on the SEC’s own enforcement activities.

“Historically it’s not been the position of the SEC to come out against investor rights,” says Jill Fisch, a law professor at Fordham University. “The SEC has typically viewed its mandate as protecting investors, protecting shareholder rights. The position in the brief is clearly an anti-private-litigation position.”

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