'Substantial Assistance' Clarified on Liability in Civil Securities Cases

, New York Law Journal


The Second Circuit rejected a lower court's reading of the standard as requiring the SEC to prove the aider and abettor proximately caused the harm on which the primary violation was predicated.

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What's being said


    The issue of causation and effect giving rise to injury must not be a primary consideration in cases of security frauds, since abaters play nominal roles that are vital to the success of such frauds. Lets take for instance a marketing officer with knowledge that a ponzi scheme is not feasible goes on to prospect for customers who eventually looses money to such scheme. If no punishment, no matter how minimal is meted out to such individual, then others will be encouraged to aid and abate criminal activities to the hurt of the investing public.

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