A sea change in the antifraud provisions of the federal securities laws may be coming soon—and they may be coming to a federal courthouse near you. Congress’s recent round of financial legislation left intact, for the moment, the U.S. Supreme Court’s line of cases prohibiting a private right of action against those who aid and abet a securities fraud. Future legislation and periodic assaults by securities plaintiffs, however, may slowly erode or remove altogether that prohibition and bring federal liability to a broad range of third parties who are not participants in the securities markets. Those who interact with publicly traded companies only as vendors or customers could be subjected to federal securities lawsuits by private plaintiffs even where those vendors or customers have no input into the financial reporting of those public companies.
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