Firms can be sued over Stanford work

Investors in Allen Stanford’s $7 billion Ponzi scheme can sue to recoup losses from lawyers, insurance brokers and others who worked with the convicted swindler, the Supreme Court ruled Wednesday.

On a 7 to 2 vote, the court held that lawsuits filed in state courts can go forward. The majority said the ruling would not affect the Securities and Exchange Commission’s ability to enforce securities law as some had feared.

Stanford’s fraud involved the sale of bogus certificates of deposit by his Antigua-based Stanford International Bank. He is serving a 110-year prison sentence.

New York-based law firms Chadbourne & Parke and Proskauer Rose and insurance brokerage Willis Group Holdings were sued by former Stanford investors. They also sued financial services firm SEI Investments and insurance company Bowen, Miclette & Britt.

Writing for the majority, Justice Stephen G. Breyer said the Securities Litigation Uniform Standards Act did not prevent the state lawsuits from proceeding. The law says state lawsuits are barred when the alleged misrepresentations are “in connection with” the purchase or sale of a covered security, which is defined as a security listed on a national exchange at the time the alleged unlawful conduct occurred.

As the defendants in the case were not selling securities traded on U.S. exchanges, “it is difficult to see why the federal securities laws would be — or should be — concerned with shielding such entities from lawsuits,” Breyer wrote.

The Obama administration, representing the SEC, had sided with the defendants to try to protect the agency’s authority to pursue wide-ranging investigations.

Justice Anthony M. Kennedy wrote in a dissenting opinion that the ruling would have a negative impact on the SEC because it “casts doubt on the applicability of federal securities law to cases of serious securities fraud.” Kennedy was joined in dissent by Justice Samuel A. Alito Jr.

— Reuters

Tesla weighs 4 states for battery factory

Electric car maker Tesla Motors is considering sites in Nevada, Arizona, New Mexico and Texas for a huge battery factory that would employ about 6,500 people.

Tesla plans to start construction this year and complete the factory in 2017.

The Palo Alto, Calif.-based company expects the factory to supply enough batteries for the 500,000 cars it hopes to make by 2020.

Tesla and partners including battery maker Panasonic will invest between $4 billion and $5 billion to build the factory, which would supply battery packs to Tesla’s Fremont, Calif., assembly plant.

Tesla also announced Wednesday plans to raise $1.6 billion in a debt offering. The proceeds would help finance the new factory and a lower-cost vehicle expected to go on sale at the end of 2016.

— Associated Press

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