The North American Securities Administrators Association says that it is disappointed with the US Supreme Court’s recent ruling against investors in a recent high-profile case.

NASAA says that the decision against the plaintiffs in Stoneridge Investment Partners v. Scientific-Atlanta Inc., has closed an important avenue for investors to seek redress in the courts.

“The court missed an important opportunity to make clear that all of the principal actors in a fraudulent scheme – not just those who disseminate falsehoods – must answer to their victims. Far from burdening our markets, a decision for the plaintiffs in Stoneridge would have done much to protect the integrity of our markets to the benefit of investors and legitimate businesses alike,” said NASAA president and North Dakota Securities Commissioner, Karen Tyler.

Tyler said NASAA will continue to support the vital role of private remedies in sustaining investor confidence. “The Supreme Court has repeatedly stated that the private cause of action is an ‘essential tool’ for the effective enforcement of securities laws,” Tyler said.

“Congress echoed the point when it declared that ‘private lawsuits promote public and global confidence in our capital markets and help to deter wrongdoing’ and we intend to work with Congress to clarify the rights of investors.”

In June, 2007 NASAA filed an amicus brief in the US Supreme Court in support of an appeal by Stoneridge. Specifically, NASAA supported Stoneridge’s ultimately unsuccessful appeal in support of an investor’s right to sue those who have participated in securities fraud through deceptive conduct, not just through misrepresentations and omissions.

Private actions by defrauded investors are an enormously important complement to regulatory enforcement actions as a means of policing the securities marketplace, Tyler said. “State and federal securities regulators work tirelessly to detect, enjoin, and punish financial fraud. However, private actions not only provide the principal means of compensation for victims of securities fraud, they also play a vitally important role in protecting the integrity of the marketplace through deterrence,” she said.

The CFA Institute echoed these sentiments later in the day.

“This week’s Supreme Court decision in favor of Motorola and Scientific-Atlanta potentially deals a serious blow to investor protections,” said James Allen, CFA, director of the capital markets policy group for the CFA Institute centre for financial market integrity.

Recently the CFA Institute Centre released The Compensation of Senior Executives at Listed Companies: A Manual for Investors, which provides a comprehensive, in-depth examination of how executive compensation is determined, the elements of compensation, governance practices, and associated risks for investors. In reinforcing its positions on executive compensation, the CFA Institute Centre also sent a letter to the U.S. Securities and Exchange Commission requesting improvements to its executive compensation and related-party disclosure rules.

“We are not interested in tagging innocent by-standers or opening litigation flood-gates, rather having the ability to take legal action when a company is directly part of another company’s fraudulent scheme,” concluded Allen.