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Wall Street Reform Legislation May Include Aiding and Abetting Liability Provision

David P. Meyer, Esq.

U.S. Senator Arlen Specter (D-Pa.) has introduced an amendment to the larger Wall Street reform legislation currently working its way through Congress that would create a private cause of action against anyone who “knowingly provides substantial assistance” to a primary violator of the federal securities laws. Senator Specter, joined by several other senators, proposed the amendment last week. Click here to read the text of Senator Specter’s proposed amendment.

As discussed in one of our prior blog posts, “Specter Bill Awaits Mark-up,” Senator Specter had previously proposed a stand alone bill to create a private cause of action for aiding and abetting liability under the federal securities law. That bill is still tied up in committee.

The change of tactic, to include such a provision as part of a larger bill, could provide a potential shortcut to its passage. Debate on the Wall Street reform is likely to focus on other, more controversial issues contained in the bill. Specter’s amendment, should it make its way into the final version of the bill, would not likely occasion much debate.