2 Inc. v. Green, 430 U.S. 462, 478 (1977) (rejecting § 10(b) claims that “could not be easily contained”). “Scheme” liability would put American companies, including the Chamber’s members, at two tremendous competitive disadvantages. First, American issuers of securities would have to price their commercial transactions to reflect the substantial added risk of liability for their counterparties. Second, and even more important, to avoid litigation risk, both domestic and foreign companies would have significant incentives to do business with companies listed on foreign exchanges, or with private companies. The Chamber’s members would prefer that business choices be based on factors like price, efficiency, quality, and service, rather than litigation risk. INTRODUCTION AND SUMMARY OF ARGUMENT Although expanding the implied § 10(b) action to cover “scheme” liability suffers from an aggregation of flaws, this brief focuses on two points of particular concern to the business community. First, the standard of liability under § 10(b) should be workable, predictable, and consistently applied so that businesses can plan their affairs with reasonable certainty. “Scheme” liability is wholly unworkable in implied § 10(b) actions. Accordingly, the Chamber submits that the proper standard is as follows: a commercial counterparty is liable under § 10(b) for deceptive “conduct” only when it has a duty to disclose to the issuer’s shareholders. This standard follows this Court’s precedent and is based on well-understood, time-honored concepts that lower courts can readily apply in a predictable manner. Second, in order to provide much-needed guidance to lower courts and the business community, the Court should not merely decide the narrow question of the proper definition of the term “deceptive,” but instead should recognize that the “scheme” liability theory would fundamentally alter many traditional elements of the implied cause of action in ways
