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14 J. Corp. L. 313 (1988-1989)
Secondary Liability under the Federal Securities Laws - Aiding and Abetting, Conspiracy, Controlling Person, and Agency: Common-Law Principles and the Statutory Scheme

handle is hein.journals/jcorl14 and id is 323 raw text is: Secondary Liability Under The Federal Securities Laws-Aiding and Abetting, Conspiracy, Controlling Person, and Agency: Common-Law Principles and The Statutory Scheme William H. Kuehnle* I. INTRODUCTION ....................................................................... 314 A. The Basis for Use of Secondary Liability Under the Federal Securities Laws .............................................................. 315 B. Defining Secondary Liability ........................................... 318 II. AIDING AND ABETTING AND CONSPIRACY ................................... 320 A. Aiding and Abetting ...................................................... 320 1. Introduction ........................................................... 320 2. The Knowledge Standard for Aiding and Abetting ...... 322 a. Rule lOb-5 Scienter and the Knowledge Standard for Aiding and Abetting .................................. 324 b. The Recklessness Standard as Constituting Knowl- edge for Aiding and Abetting ........................... 326 c. The Effect of Inaction versus Action on the Knowl- edge Standard ................................................. 331 d. Knowledge Standard as it Applies to Provisions Not Requiring Scienter for Primary Violations .... 333 3. The Assistance Requirement ..................................... 339 a. The Amount of Assistance Needed to Bring Lia- bility (Causal Relation) .................................... 339 b. Knowledge of Rendering Assistance ................... 341 c. Assistance by Nonaction .................................. 342 4. Sum m ary ............................................................... 343 B . Conspiracy .................................................................... 343 1. Introduction ........................................................... 343 2. Criminal Conspiracy versus Civil Conspiracy .............. 344 3. Elements of Conspiracy ........................................... 345 a. The Requirement of an Agreement .................... 345 * William H. Kuehnle is Assistant Chief Litigation Counsel, Division of Enforcement, Securities and Exchange Commission. The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of the Commission or of the author's colleagues upon the staff of the Commission. Copyright 1988 Kuehnle.