Is Aiding & Abetting Securities Fraud Legal? The Fed Says, “Yes”
The most devious forms of investor fraud are far too complex to be carried out by your broker alone. Other individuals often aid in the fraud and benefit from it. Those individuals may be auditors, stock analysts, accountants or others. Should those who aid and abet securities fraud be brought to justice?
Unfortunately, according to a landmark 1994 decision by the U.S. Supreme court (Central Bank of Denver v. First Interstate Bank of Denver), defrauded investors cannot bring claims against these aiders and abetters of investor fraud in federal courts.
A Setback For Investors
Normally, investors would still be protected by state laws which in many cases can be used to sue the aiders and abettors of fraud in state court. However, an Arizona trial judge recently ruled that the 1994 Central Bank of Denver case trumps a 1979 Arizona Supreme Court ruling (State v. Superior Court, Davis), which specifically allows investors to bring claims against the aiders and abettors of fraud.
Fortunately, the attorneys in this case (Frank Balint and Andy Friedman of Bonnett, Fairbourn, Friedman & Balint, and Stan Marks of Begam & Marks) are using powerful legal arguments to assert the rights of the fraud victims to sue the aiders and abettors of fraud.
The Fight For Investor Rights Continues
The Consumer Investor Resource Center applauds the efforts of these attorneys, especially their recent amicus brief, filed with the Arizona Supreme Court, which challenges the trial judge’s improper decision. The Arizona Supreme Court has agreed to hear the case and decide if Arizona state law will prevail over the U.S. Supreme Court’s 1994 decision. If successful, this case will be a very big win for consumer investor rights across the country.
Has investor fraud caused you to suffer financial damages, or has one of your family members been the victim of stock fraud? If you have questions about what to do next, contact the Consumer Investor Resource Center for a free and totally confidential consultation.