SOX Not Suited to Private Suit

Race to the Bottom is on a roll (to the bottom, presumably). Today they discuss In Re Digimark Corp. Derivative Litigation (549 F.3d 1223) a Ninth Circuit case where the court found that there is no private right of action under SOX section 304.

Two kinds of securities law causes of action give private parties the right to sue: sections that explicitly create a private right of action, and sections which declare certain actions, “unlawful,” and which have been held by courts to imply a right to maintain a civil action. Section 11 and 12 of the ’33 Act, for instance, create explicit private rights of action. Section 10(b) of the '34 Act has been held to create an implied private right of action. Implied rights of action have a long history in the courts, but they are presently out of favor. It is reasonable to expect that the Supreme Court will not find any new implied rights of action. Presently, there are only 3: 10(b), 14a-9, and 14(e).

The decision is available on RTB's sister site at the University of Denver Law School.