A Fatal Flaw: The Ninth Circuit Further Restricts Liability in 10b-5 Private Security Fraud Cases in Reese v. BP

Abstract

On June 28, 2011, in Reese v. BP Explorations (Alaska) Inc., the U.S. Court of Appeals for the Ninth Circuit held that plaintiffs could not bring certain securities fraud claims relating to a burst in an Alaskan oil pipeline, because the plaintiffs failed to show that the defendant had the “ultimate authority” for the allegedly fraudulent SEC filings. In so doing, the court continued a recent trend in securities fraud cases of making it more difficult for plaintiffs to bring claims. This Comment argues that although the Ninth Circuit’s ruling was consistent with Supreme Court precedent, it may allow otherwise liable parties to escape liability, and the decision expands the growing trend of reducing the scope of private actions under SEC Rule 10b-5.