Second Circuit Significantly Limits Secondary Actors’ Liability in Private Securities Fraud Suits

May 03, 2010
In a recent decision arising out of the Refco fraud, the United States Court of Appeals for the Second Circuit held that secondary actors, such as attorneys and accountants, can be liable for false statements in a private securities action only if the statements at issue were explicitly attributed to that actor when the statements were disseminated. Relying on prior Second Circuit case law and the Supreme Court’s Central Bank opinion, the Mayer Brown court adopted a bright-line “attribution standard” and rejected the alternative “creator standard,” urged by plaintiffs and by the SEC as amicus curiae. This update examines the Mayer Brown case and the impact of the court’s ruling.