It’s Getting (More) Complicated: Emerging Challenges in Securities and Corporate Litigation


Cornerstone Research hosted a presentation by Professor Joseph Grundfest of Stanford Law School.

At this presentation held in San Francisco, and also delivered in New York and Washington, DC, Joseph Grundfest discussed three recent cases—two before the U.S. Supreme Court and one in Delaware—and the impact of their outcomes on the securities litigation market.

Professor Grundfest’s topics included:

  • Negligence or scienter or nothing at all? In Emulex, the U.S. Supreme Court will consider whether the standard for liability under Section 14(e) is negligence or scienter, and will be further pressed to consider whether the 14(e) implied right of action should be recognized at all.
  • Will scheme liability swallow all of Rule 10b-5? Another recent case before the Court, Lorenzo, asks whether defendants can be held liable under 10b-5(a) and (c) scheme liability theories for disseminating a false statement that is otherwise chargeable as a 10b-5(b) offense. The fact pattern raises complex issues related to the scope of “maker” liability under Janus, and to aiding and abetting liability under Central Bank and Stoneridge.
  • Can forum-selection clauses direct federal Section 11 claims to federal court? In Sciabacucchi, the Delaware Court of Chancery held that charter provisions designating federal court as the forum for resolving Securities Act claims do not relate to a corporation’s internal affairs. These claims, therefore, are improper subject matter for Delaware corporation charters. If upheld by Delaware’s Supreme Court, the decision has significant implications for the future of Section 11 litigation.


Joseph A. Grundfest

Former Commissioner, Securities and Exchange Commission;
W. A. Franke Professor of Law and Business,
Stanford Law School,
Senior Faculty, Rock Center for Corporate Governance,
Stanford University