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The Roberts Court’s initial work in the field of securities law demonstrates what happens when a court of general jurisdiction is charged with making decisions in an area with which it is unfamiliar. Analysis of the Court’s decisions yields few, if any, common threads tying them together as a body of work. Whatever direction the securities laws take in the Supreme Court, do not expect opinions to grapple more seriously with the interplay between securities law and the securities markets anytime soon. The randomness of the Roberts Court’s securities jurisprudence results in part from the stream of cases that make their way on to the Court’s docket. It is also a product, however, of the absence of any individual justice having an interest in the field. A comparison with Lewis Powell’s tenure on the Court illustrates the point. Powell drew on his background as a corporate lawyer to push the Court in a particular direction during his time on the Court, reining in securities class actions and imposing a common law framework on the SEC’s vendetta against insider trading.
The Roberts Court does not have a figure like Powell in the field of securities law. It agrees to hear securities cases because there is a circuit split, not because it is anxious to impose its mark on the field of securities law. The debates that engage the justices in these cases do not come from the field of securities laws, but rather, are more general: statutory interpretation, the use of legislative history, the presumption against the extraterritorial application of legislation, class certification, and so forth.
What does this indifference mean for securities law? First, it means that the path of law is somewhat unpredictable. It is hard to know when a justice will be so galvanized by a particular issue that he takes ownership of it, as Justice Kennedy appears to have done with aiding and abetting. Second, absent a galvanizing issue, there is likely to be a presumption in favor of the position taken by the government. This attitude of occasional deference means that the relationship between the SEC and the Solicitor General takes on critical importance. If the SEC can persuade the Solicitor General, its position is more likely to prevail in the Roberts Court.
No justice is likely to push securities law in a more aggressive direction than the SEC; the retirement ofJustice Stevens means that there is no one left on the Court with any pretensions of being an activist in the field, particularly in the area of the private right of action. Justice Ginsberg, writing for the Tellabs majority, made it clear that the Court intends to defer to Congress in this area: “It is the federal lawmaker’s prerogative ... to allow, disallow, or shape the contours of— including the pleading and proof requirements for—§ 10(b) private actions.” This language suggests we should not expect the Court to be anything more than a passive observer here; major changes, if any, will come from Congress.
The Roberts Court’s cautious attitude is a departure for the Supreme Court. The Court’s treatment of the basic question of the existence of the implied private right of action in Stoneridge sends a clear signal that the Court’s expansionist days are over in the field of securities law. Kennedy made it clear that the initial implication of a private cause of action had been a mistake; under current doctrine, private causes of action are based only on explicit instruction from Congress. Having recognized the mistake, the Court was not going to compound the error: “Concerns with the judicial creation of a private cause of action caution against its expansion. The decision to extend the cause of action is for Congress, not for us. Though it remains the law, the § 10(b) private right should not be extended beyond its present boundaries" Thus, Stoneridge stands for the proposition that the Rule 10b-5 cause of action is now frozen, at least when it comes to the expansion of liability by the Court. Expansion of the cause of action will have to come from Congress, if it is to come at all. For its part, the Roberts Court is likely to maintain the status quo.
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