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Secondary Liability For Securities Fraud: Gatekeepers In State Court, Jennifer J. Johnson
Secondary Liability For Securities Fraud: Gatekeepers In State Court, Jennifer J. Johnson
Jennifer J Johnson
This paper discusses gatekeeper liability under state securities laws for professionals and other secondary participants in securities transactions. The recent economic meltdown exposed numerous Ponzi schemes from Madoff to Medical Capital that were no longer able to masquerade as profitable enterprises. When promoters of fraudulent ventures are unable to provide restitution to their victims, plaintiffs seek out other sources of repayment including professionals and other secondary participants in the transactions that precipitated their losses. Although most scholars agree that professionals can perform an important role in deterring securities fraud, scholarly opinions vary widely on the appropriate liability regime, if any, …