Abstract

This Article examines the continuing scope of liability of collateral participants after Bank of Denver with special attention given to accountants and attorneys. In Parts I and II the author reasons that the many approaches to defining the scope of liability under section 10(b) that existed prior to Bank of Denver should continue to be applicable after the decision. The author reasons in Part I that because the Reform Act expressly recognizes aiding and abetting authority for SEC enforcement actions in the courts, the Congress assured the regulatory flexibility that was at the heart of its earlier augmentation of the SEC's enforcement powers in the Securities Enforcement Remedies and Penny Stock Reform Act of 1990. But as will be seen in Part III, the assured regulatory harmony for the SEC poses grave uncertainty for private litigants who reasonably fear that an unintended consequence of the SEC's authority to reach aiders and abettors is a narrowing of the scope of primary participant liability in private litigation. In Part IV the author places Bank of Denver in the larger context, arguing there is a need to change the rhetoric that surrounds the antifraud action so that deterrence is more frequently emphasized; with the antifraud provision so viewed, Bank of Denver is out of step with prior decisions and the philosophy of proportionate liability as now embraced in the Reform Act.

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