Dann at Odds with US Solicitor General over Securities Litigation

Posted on August 16, 2007 by Jack J. Gravelle

Ohio Attorney General Mark Dann has criticized US Solicitor General Paul Clement for filing an amicus brief with the US Supreme Court that argues against liability for certain forms of securities fraud. As mentioned here, Dann filed an amicus brief earlier this year along with 31 other state AGs arguing the opposite position. The SEC had asked the federal government to take the position of the state AGs in support of the defrauded investors but the Bush administration demurred.

At the heart of the case is Section 10(b) of the Securities Exchange Act which essentially prohibits the use of any manipulative or deceptive device in connection with the purchase or sale of a security. The Eighth Circuit has held that fraud is not deceptive under Section 10(b) unless the defrauding party made a misstatement or failed to disclose information despite a duty to disclose. Defrauded investors argue that such a ruling protects accountants, lawyers, banks, and other third parties who perpetuate fraud but who don’t actually make misleading statements to investors. Oral argument is set for this fall. 

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Dann Spurs Ohio on Securities Law Enforcement

Posted on May 22, 2007 by Jack J. Gravelle

Last week the N.Y. Times reported here that Ohio Attorney General Marc Dann is bringing Ohio to the national stage regarding securities law enforcement and responsible corporate governance.

Since taking office in January, Mr. Dann has received national attention for persuading 23 state attorneys general to join in an amicus brief opposing the SEC’s position in a case before the U.S. Supreme Court about the Private Securities Litigation Reform Act of 1995. When enacted, the law created stricter standards for bringing private securities litigation against issuers of securities. Mr. Dann opposes the SEC’s contention that investor-plaintiffs should have to show “a high likelihood” that the defendant intended to violate the law.

The amicus brief—combined with Mr. Dann’s focus on stock option backdating by Ohio executives, state antitrust laws, and the obligations owed by directors to investors—has the N.Y. Times suggesting that Mr. Dann is emulating former New York Attorney General Eliot Spitzer.

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