In recent years, securities fraud plaintiffs in the United States have turned increasingly to a theory of 'scheme' liability under Section 10(b) of the Securities Exchange Act in efforts to recover damages from deep-pocketed banks, accounting firms, attorneys and other so-called 'secondary' actors in the securities markets who have not directly misrepresented or omitted material facts in communications with securities purchasers. The theory of scheme liability has been hotly debated, and several District Courts as well as Circuit Courts have reached different conclusions about the validity and scope of the theory. This paper examines recent jurisprudence in this area, focusing on how courts have addressed such claims when levelled against financial institutions.
