Case Brief

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CASE BRIEF

Title of Case: Stoneridge Investment Partners, LLC, Petitioner v. Scientific-Atlanta, Inc., et al. 128 S. Ct. 761 (2008) Facts: The plaintiff, Stoneridge Investment Partners, LLC, presented a securities fraud class action against the defendant, Charter Communications’ vendors, Scientific-Atlanta. Charter communications is a publicly traded cable company that services millions of customers throughout America. Charter contracts with vendors for equipment that is used for their company. Charter had Scientific-Atlanta sell set-top cable boxes at a higher price than the normal selling price. Scientific-Atlanta also sold advertisement at a rate four to five times higher than normal rates. These abnormally increased rates caused inflation in Charter’s stock price. Stoneridge Investment Partners also claimed that Charter Communications wanted Scientific-Atlanta to purchase advertising on its networks just to enhance their revenue. Stoneridge Investment Partners sued both Charter and Scientific-Atlanta under section 10(b) of the Securities Exchange Act of 1934. The claims against all other defendants other than Scientific-Atlanta were resolved. The District Court had to decide whether or not Scientific-Atlanta was a primary violator of the relevant statutes. Procedures: The United States District Court for the Eastern District of Missouri dismissed the claims presented Stoneridge Investment Partners against Scientific-Atlanta, stating that they were “aiders and abettors” of the fraud as opposed to “primary violators.” This concluded the District Court decision in favor of the defendant. In return, the plaintiff then appealed the case to be reviewed at the United States Court of Appeals for the Eighth Circuit. Issues: Can a company be held liable for fraud when they engaged in transactions with a corporation in order to intentionally inflate that corporation’s financial statement, even though there were no public statements concerning those transactions,...
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