Securities Law—The Securities Exchange Act of 1934—\u27Round and \u27Round We Go: The Supreme Court Again Limits the Circumstances in which Federal Courts May Hold Secondary Actors Liable Under Section 10(B) and SEC Rule 10B-5. Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 128 S. Ct. 761 (2008).

In Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., the Supreme Court addressed the plaintiffs\u27 bar\u27s most recent theory for recovery against secondary actors under section 10(b): scheme liability. Rejecting the theory as beyond the scope of liability intended by Congress, the court sharply narrowed the circumstances under which courts may hold secondary actors liable under section 10(b) and SEC Rule 10b-5. Although Stoneridge clearly limits the circumstances in which federal courts may hold secondary actors liable under section 10(b) and SEC Rule 10b-5, lower federal courts have historically alleviated the harshness of the Supreme Court\u27s approach to securities litigation by accepting alternative theories of recovery. This note begins by providing a background of securities fraud litigation under section 10(b) and SEC Rule 10-b-5. Next, it examines the facts and reasoning of the Court\u27s holding in Stoneridge. Finally, this note discusses the significance of Stoneridge and predicts the impact the case may have on future litigation under section 10(b) and SEC Rule 10b-5