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at least some of their losses. In sum, these cases demonstrate that the system has been working.
The decision of the Eighth Circuit Court of Appeals would impair the integrity of the markets. It would provide an unwarranted and unnecessary immunity to liability under the federal securities laws. If upheld, the integrity of the financial markets will be placed in jeopardy to an extent not seen since the enactment of the Securities Act of 1933 and the Securities Exchange Act of 1934. The Securities Act and the Securities Exchange Act were enacted to remedy problems in the securities markets which led to the Great Depression. Among "Congress’ objectives in passing the Act was to ’insure honest securities markets and thereby promote investor confidence’ after the market crash of 1929." S. E. C. v. Zandford, 535 U.S. 813,819 (2002)(quoting United States v. O'Hagan, 521 U.S. 642, 658 (1997)). These statutes have been integral parts of the unprecedented economic growth of the United States over the last seventy years.
The Court has recently noted that Section 10(b) and Rule 10b-5 play an "important part" in the "federal regulation of vital elements of our economy." Merrill Lynch, Pierce, Fenner & Smith v. Dabit, 547 U.S. 71 (2006) ("[t]he magnitude of the federal interest in protecting the integrity and efficient operation of the market for nationally traded securities cannot be overstated.").
The Eighth Circuit’s decision is contrary to the basic purposes of the federal securities laws, contrary to the plain language of the federal securities laws, and contrary to the interpretation of the federal securities laws given by the Court and by the Securities and Exchange Commission, If the Eighth Circuit’s analysis is upheld, a safe harbor for fraud
