05 Mar US Supreme Court Sides with Investors, Allows Class Claims Against Aiders and Abettors of Ponzi Schemes
Plaintiffs can now bring class actions under state Blue Sky Laws against those who aided and abetted Ponzi schemes where the investment program was purported to be related to a security traded on a national stock exchange – a “covered security” under the Securities Litigation Uniform Standards Act of 1998 (SLUSA) – but was instead a fraud, according to the Supreme Court’s decision in Chadbourne & Parke v. Troice.
Federal securities laws do not provide any civil relief against those who aid and abet the perpetrators of a Ponzi scheme. Therefore, victimized investors who wish to bring an action against those who aided and abetted such a scheme must bring their action under state law.
However, SLUSA requires plaintiffs bringing a class action against a party concerning “covered securities” – that is, securities traded on a national exchange or issued by issuers that have to file periodic reports with the securities regulators – to bring such action under the federal securities laws, which do not provide for no remedies for plaintiffs seeking recourse against those who aided and abetted a Ponzi scheme.
The Supreme Court debunked the notion that fraudulent, imaginary securities – the types used in the Stanford Ponzi scheme, and in many other schemes – are subject to the SLUSA’s strict rules.
Investors who were the victims of a scheme involving imaginary investments that are supposedly traded on a national exchange, like those sometimes used in Ponzi schemes, can now bring class actions against those who aided and abetted such a scheme under state law.
The Peiffer Wolf investment fraud attorneys often represent investors who lose money as a result of Ponzi schemes, investment fraud, or stockbroker misconduct. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.
Investors who believe they lost money as a result of investment fraud or misconduct may contact the securities lawyers at Peiffer Wolf, Jason Kane or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at 585-310-5140.