Bob Giuffra Testifies Against Senate Bill to Overturn U.S. Supreme Court Decision in Stoneridge

September 17, 2009

SULLIVAN & CROMWELL LLP Partner Bob Giuffra testified before the Senate Judiciary Committee against a bill proposed by U.S. Senator Arlen Specter that would overturn the U.S. Supreme Court decision in Stoneridge and impose aiding and abetting for securities law violations on banks, vendors and other third parties. Mr. Giuffra stated that, "however well-intentioned, [the bill] almost certainly would have serious unintended consequences for innocent third parties.” He expressed concern that the bill could have a negative impact on the competitiveness of U.S. markets by involving secondary defendants in frivolous and costly litigation. Referring to his role in drafting the 1995 Private Securities Litigation Reform Act (PSLRA), Mr. Giuffra noted, "We worked very hard – Republicans and Democrats alike – to enact balanced legislation that would stop real abuses, but not prevent the bringing of meritorious securities cases.... I believe that Congress acted wisely in entrusting the responsibility for deciding when to prosecute alleged aiders and abettors of securities fraud to the expert judgment of the SEC and the Department of Justice. Obviously, those agencies don't have the same incentives as the plaintiffs' bar to bring strike suits against deep-pocket defendants."