C O M M E RC I A L L IT I G A T IO N
22 n For The Defense n August 2010
n Peter D. Hawkes is an attorney with Lane Powell PC in the firm’s Portland, Oregon, office. He has experience in a wide range
of commercial litigation matters, including securities cases, contract disputes, business torts, unlawful trade practices, insurance
coverage disputes and real estate disputes. Mr. Hawkes also has significant experience in First Amendment litigation, white-
collar criminal defense, and representation of long term care providers.
Should Professionals
Be Concerned? Aiding and Abetting
Liability Under State
Securities Statutes
under Section 10(b) of the Securities Ex-
change Act of 1934. Building on an earlier de-
cision in which it held that Section 10(b) did
not impose aiding and abetting liability, Cen-
tral Bank of Denver v. First Interstate Bank of
Denver, 511 U.S. 164 (1994), the Court clar-
ied that secondary actors involved in se-
curities transactions cannot be held liable
based on the “scheme liability” theory. e
Stoneridge decision was tremendously com-
forting to many professionals involved in se-
curities transactions, such as attorneys and
accountants, who had much to fear from an
expansion of potentially devastating civil lia-
bility for federal securities fraud.
However, while Stoneridge has shielded
lawyers, accountants, and others involved
in securities transactions from federal li a-
bility initiated through private lawsuits al-
leging federal securities fraud, most state
securities statutes do permit plaintis to
sue for aiding and abetting securities fraud.
Although many states limit that liability to
certain classes of persons, such as employ-
ees of sellers or brokers materially involved
in the f raudulent transactions, others do
not. rough legislation or judicial interpre-
tation, a number of state securities statutes
around the country extend joint and several
liability to virtually anyone with a material
role in a securities transac tion—including
lawyers and accountants who merely pro-
vided professional services to clients. More-
over, many of these state statutes do not
require a plainti to prove that a second-
ary actor had a culpable state of mind. In-
stead, a secondary actor is required to prove
not only that he or she did not know of the
fraud, but also that he or she could not have
known of it with the exercise of reason-
able care. Professionals involved in securi-
ties transactions and their counsel should,
therefore, understand the securities f raud
laws in states in which these transactions
occur, and they should ta ke steps to mini-
mize their liabilit y exposure.
No Liabilit y for Aiding and Abe tting
Securiti es Fraud Un der Feder al Law
In Central Bank, the Supreme Court, in
By Peter D. Hawkes
Broader liability in many
states makes it critical
to understand the laws
that are applicable to the
transactions involved.
In Stoneridge Investment Partners, LLC v. Scientic-
Atlanta, Inc., 552 U.S. 148 (2008), the U.S. Supreme Court
rmly closed the door on plaintis seeking to sue on the
basis of aiding and abetting for federal securities fraud
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