Printer Friendly

Supreme Court: defendants may seek contribution in securities rule 10b-5 cases.

The U.S. Supreme Court resolved a split among various federal circuit courts by ruling in an action brought under rule 10b-5, the antifraud provision of the Securities and Exchange Act of 1934, that codefendants can seek contributions from each other (that is, the right of the party required to compensate a victim to a contribution from a codefendant jointly responsible for the injury).

Employers Insurance of Wausau, which insured the directors and officers involved in this matter, paid $13 million to settle a case brought under rule 10b-5. Wausau, as subrogee to the settling parties' rights (that is, one who succeeds to the legal rights acquired by another), sued the attorneys and accountants involved in the stock offering that led to the 10-5 action, alleging the attorneys and accountants had joint responsibilities for the securities law violations.

The Supreme Court, is granting Wausau the right to sue the attorneys and accountants, said there was an implied right of contribution under rule 10b-5. The Court reasoned that if Congress had addressed this question when it enacted the 1934 act, it would have recognized a right to contribution. The Court further reasoned that allowing codefendants to seek contribution from other codefendants merely raised the issue of how to apportion damages, rather than recognizing any new duties under 10b-5. (Musick, Peeler & Garrett v. Employers Insurance of Wausau, U.S. Sup. Ct. no. 92-34)
COPYRIGHT 1993 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Nov 1, 1993
Previous Article:Supreme Court: punitive damage awards upheld.
Next Article:New York court finds privity exists in accountant's case.

Related Articles
Securities law statute of limitations ruling overturned.
Right to bring securities fraud and RICO action against auditors upheld.
Gaining a new balance in the courts: some of the liability burden has disappeared - but a heavy weight remains.
U.S. District Court makes summary judgment ruling.
Tort reform revolution.
Do-it-yourself brain surgery, or why you may need an appellate specialist.
The Supreme Court's new rule on amicus briefs.
Partners in crime: Enron and WorldCom couldn't have happened without the help of accountants, bankers, and lawyers. After a decade of lax regulation...
Remedies for wronged investors: recent federal laws and court decisions have diminished the rights of investors to recover for fraud and other...

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters