Chadbourne & Parke LLP v. Troice - Post-Argument SCOTUScast
SCOTUScast 10-15-13 featuring Richard Painter
SCOTUScast 10-15-13 featuring Richard Painter
On October 7, 2013, the Supreme Court heard oral argument in three cases that question the preemptive scope of federal securities laws. Under the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”), federal law ordinarily precludes the bringing of state law-based class actions if they allege a misrepresentation or omission of a material fact “in connection with” the purchase or sale of a covered security. Instead such lawsuits must proceed, if at all, under federal securities laws. Three cases before the Court, however, question just how far the the preemptive scope of SLUSA extends:
In Chadbourne & Parke LLP v. Troice, the question is twofold: (1) does preclusion apply to an alleged scheme of fraud that involves misrepresentations about transactions in SLUSA-covered securities; and (2) does preclusion apply to allegations that defendants aided and abetted SLUSA-covered securities fraud when the defendants themselves did not make misrepresentations about the purchase or sale of SLUSA-covered securities?
Proskauer Rose v. Troice raises two similar questions: (1) does preclusion apply only when the purchase or sale of the security in question is “more than tangentially related” to the core of the alleged fraud; and (2) does preclusion apply when the defendant is sued for aiding and abetting fraud, but a non-party made the only alleged misrepresentation in connection with the securities transaction at issue?
Finally, Willis of Colorado Inc. v. Troice questions whether a state law-based class action that normally would be preempted can nevertheless avoid preclusion if it includes allegations that are somewhat removed from a SLUSA-covered securities transaction.
To discuss these cases, we have Richard Painter, Professor of Law at the University of Minnesota Law School.
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S. Walter Richey Professor of Corporate Law, University of Minnesota Law School
Professor Richard W. Painter received his B.A., summa cum laude, in history from Harvard University and his J.D. from Yale University, where he was an editor of the Yale Journal on Regulation. Following law school, he clerked for Judge John T. Noonan Jr., of the United States Court of Appeals for the Ninth Circuit and later practiced at Sullivan & Cromwell in New York City and Finn Dixon & Herling in Stamford, Connecticut.
He has served as a tenured member of the law faculty at the University of Oregon School of Law and the University of Illinois College of Law, where he was the Guy Raymond and Mildred Van Voorhis Jones Professor of Law from 2002 to 2005.
From February 2005 to July 2007, he was Associate Counsel to the President in the White House Counsel's office, serving as the chief ethics lawyer for the President, White House employees and senior nominees to Senate-confirmed positions in the Executive Branch. He is a member of the American Law Institute and is an advisor for the new ALI Principles of Government Ethics. He has also been active in the Professional Responsibility Section of the American Bar Association.
Professor Painter has also been active in law reform efforts aimed at deterring securities fraud and improving ethics of corporate managers and lawyers. A key provision of the Sarbanes-Oxley Act of 2002 requiring the SEC to issue rules of professional responsibility for securities lawyers was based on earlier proposals Professor Painter made in law review articles and to the ABA and the SEC. He has given dozens of lectures on the Sarbanes-Oxley Act to law schools, bar associations, and learned societies, such as the American Academy of Arts and Sciences. Professor Painter has on four separate occasions provided invited testimony before committees of the U.S. House of Representatives or the U.S. Senate on securities litigation and/or the role of attorneys in corporate governance.
His book, Getting the Government America Deserves: How Ethics Reform Can Make a Difference, was published by Oxford University Press in January 2009. He has written op-eds on government ethics for various publications including the New York Times, the Washington Post and the Los Angeles Times, and he has been interviewed several times on government ethics and corporate ethics by national news organizations, including appearances on Lawrence O'Donnell (MSNBC), Anderson Cooper 360 (CNN), CNN News, Fox News, National Public Radio All Things Considered, and Minnesota Public Radio News. In 2011, he testified before the U.S. House Government Oversight Committee on partisan political activity by government officials and reform of the Hatch Act. Professor Painter has also given expert testimony in cases involving securities transactions and the professional responsibility of lawyers. He testified as a defense witness in SEC. v. The Reserve Money Market Fund (SDNY, November 2012), a jury trial of an SEC enforcement action against the founders of the world's oldest money market fund that ended with a defense verdict on all of the fraud counts.
Professor Painter is the author of two casebooks: Securities Litigation and Enforcement (with Margaret Sachs and Donna Nagy; West 2003; Second Edition, 2007; Third Edition 2011) and Professional and Personal Responsibilities of the Lawyer (with Judge John T. Noonan Jr.; Foundation 1997; Second Edition, 2001; Third Edition 2011). He has written dozens of articles, book reviews, and essays, including a series of papers and a forthcoming book with Minnesota colleague Claire Hill on the personal responsibility of investment bankers.