Amicus Curiae Brief — Citigroup Inc., Petitioner v. Otto Candies, LLC, et al.

No. 25-391

IN THE

Supreme Court of the United States

CITIGROUP INC.,

Petitioner,

v.

OTTO CANDIES, LLC, ET AL.,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Eleventh Circuit

BRIEF FOR AMICI CURIAE SECURITIES

INDUSTRY AND FINANCIAL MARKETS

ASSOCIATION, CHAMBER OF COMMERCE

OF THE UNITED STATES OF AMERICA, AND

THE BANK POLICY INSTITUTE IN

SUPPORT OF PETITIONER

CHARLOTTE H. TAYLOR

Counsel of Record

JOHN C. BRINKERHOFF JR.

JONES DAY

51 Louisiana Ave., NW

Washington, DC 20001

(202) 879-3872

ctaylor@jonesday.com

Counsel for Amici Curiae

(Additional counsel on inside cover)

KEVIN CARROLL

SECURITIES INDUSTRY AND

FINANCIAL MARKETS

ASSOCIATION

1099 New York Ave., NW

Washington, DC 20001

JENNIFER B. DICKEY

JANET GALERIA

U.S. CHAMBER

LITIGATION CENTER

1615 H St., NW

Washington, D.C. 20062

Counsel for the Securities

Industry and Financial

Markets Association

Counsel for the Chamber

of Commerce of the

United States of America

GREGG ROZANSKY

THE BANK POLICY INSTITUTE

1300 Eye St. NW

Suite 1100 W

Washington, DC 20005

Counsel for The Bank Policy

Institute

i

TABLE OF CONTENTS

Page

INTEREST OF THE AMICI CURIAE .......................1

INTRODUCTION AND SUMMARY OF

ARGUMENT ...............................................................2

ARGUMENT ...............................................................5

I.

THE HISTORY OF CIVIL RICO AND THE

PSLRA BAR HIGHLIGHT THE NEED FOR

REVIEW AND THE ERROR OF THE LOWER

COURT...........................................................5

A.

The PSLRA Bar Was Enacted in the

Wake of Severe Abuse by Civil RICO

Plaintiffs Alleging Securities Fraud. ....5

B.

The Eleventh Circuit’s Rule Will Open

the Floodgates to Securities Fraud

Claims That Should Be Barred and

Burden Public Companies and Their

Advisors. ............................................... 12

C.

The Origin and Statutory Context of the

PSLRA Bar Underscore that the

Eleventh Circuit Decision is Wrong. ... 17

II.

THIS COURT SHOULD RESOLVE THE CLEAR

CIRCUIT SPLIT NOW. ................................... 20

CONCLUSION .......................................................... 24

ii

TABLE OF AUTHORITIES

Page(s)

CASES

Anza v. Ideal Steel Supply Corp.,

547 U.S. 451 (2006) .............................................. 11

Bald Eagle Area Sch. Dist. v. Keystone

Fin., Inc.,

189 F.3d 321 (3d Cir. 1999) ................................. 11

Blue Chip Stamps v. Manor Drug

Stores,

421 U.S. 723 (1975) .............................. 6, 13–16, 18

Casey v. Dep’t of State,

980 F.2d 1472 (D.C. Cir. 1992) .............................. 8

Cent. Bank of Den., N.A. v. First

Interstate Bank of Den., N.A.,

511 U.S. 164 (1994) ..................................... 5, 6, 13,

............................ 15, 16, 18, 19

Dan River, Inc. v. Icahn,

701 F.2d 278 (4th Cir. 1983) .................................. 8

Howard v. AOL Inc.,

208 F.3d 741 (9th Cir. 2000) .......................... 11, 22

Lerner v. Colman,

26 F.4th 71 (1st Cir. 2022) ............................. 21–23

Med. Marijuana, Inc. v. Horn,

604 U.S. 593 (2025) ................................................ 2

iii

Merrill Lynch, Pierce, Fenner & Smith

Inc. v. Dabit,

547 U.S. 71 (2006) ...................................... 5, 16–18

MLSMK Investment Co. v. JP Morgan

Chase & Co.,

651 F.3d 268 (2d Cir. 2011) ........................... 21–23

Powers v. Wells Fargo Bank NA,

439 F.3d 1043 (9th Cir. 2006) .............................. 11

Rubin v. Islamic Republic of Iran,

583 U.S. 202 (2018) .............................................. 19

Schacht v. Brown,

711 F.2d 1343 (7th Cir. 1983) ................................ 8

Sedima, S.P.R.L. v. Imrex Co., Inc.,

741 F.2d 482 (2d Cir. 1984) ............................... 7, 9

Sedima, S.P.R.L. v. Imrex Co., Inc.,

473 U.S. 479 (1985) .................................... 9, 14, 19

Stoneridge Inv. Partners, LLC v.

Scientific-Atlanta, Inc.,

552 U.S. 148 (2008) ........................ 6, 14, 16, 18, 20

Tellabs, Inc. v. Makor Issues & Rts.,

Ltd.,

551 U.S. 308 (2007) ................................................ 6

United States v. Hicks,

100 F.4th 1295 (11th Cir. 2024) .......................... 23

Warner v. Alexander Grant & Co.,

828 F.2d 1528 (11th Cir. 1987) ............................ 14

iv

Young v. UPS, Inc.,

575 U.S. 206 (2015) .............................................. 19

STATUTES

15 U.S.C. § 78t ............................................... 13, 15, 20

18 U.S.C. § 1961 .......................................................... 7

18 U.S.C. § 1964 .......................................... 3, 7, 10, 12

18 U.S.C. § 1965 ........................................................ 23

OTHER AUTHORITIES

141 Cong. Rec. 7142 (1995) ................................. 10, 11

Janet C. Alexander, Do the Merits

Matter? A Study of Settlements in

Securities Class Actions,

43 Stan. L. Rev. 497 (1991).................................... 6

Jonathan Brogaard et al., Does

Shareholder Litigation Risk Cause

Public Firms to Delist? Evidence

from Securities Class Action

Lawsuits, 59 J. Fin. & Quant.

Analysis 1726 (2024) ............................................ 15

Common Sense Legal Reform Act:

Hearings Before the Subcomm. on

Telecomm. & Fin. of the H. Comm.

on Commerce, 104th Cong. (1995)....................... 10

v

Craig Doidge et al., Are There Too Few

Publicly Listed Firms in the US?

(NBER 2025) ........................................................ 15

Expanding Accountants’ Liability,

1 Colum. Bus. L. Rev. 213 (1988) ........................ 16

Bryan A. Garner et al., The Law of

Judicial Precedent (2016) .............................. 22, 23

Neil Gorsuch & Paul Matey, Settlements

in Securities Fraud Class Actions:

Improving Investor Protection

(Wash. Legal Found. 2005) .............................. 6, 17

Arthur N. Mathews, Shifting the

Burden of Losses in the Securities

Markets: The Role of Civil RICO in

Securities Litigation,

65 Notre Dame L. Rev. 896 (1990) ........................ 7

Note, Civil RICO: The Temptation and

Impropriety of Judicial Restriction,

95 Harv. L. Rev. 1101 (1982) ................................. 9

A.C. Pritchard, Markets as Monitors,

85 Va. L. Rev. 925 (1999) ....................................... 6

William H. Rehnquist, Get RICO Cases

Out of My Courtroom, Wall St. J.,

May 19, 1989 .......................................................... 8

William H. Rehnquist, Remarks of the

Chief Justice,

21 St. Mary’s L.J. 5 (1989) ..................................... 7

vi

RICO Reform: Hearings before the

Subcomm. On Criminal Justice of

the H. Comm. on the Judiciary,

99th Cong. (1985) ................................................... 8

S. Rep. No. 104-98 (1995) .................................... 19, 20

Securities Investor Protection Act of

1991: Hearings on S. 1533 Before the

Subcomm. on Securities of the S.

Comm. on Banking, Housing &

Urban Affairs, 102nd Cong., 1st

Sess. (1991)........................................................... 10

David B. Sentelle, Civil RICO:

The Judges’ Perspective,

12 Campbell L. Rev. 145 (1990)............................. 8

Ralph K. Winter, Paying Lawyers,

Empowering Prosecutors, and

Protecting Managers,

42 Duke L.J. 945 (1993) ......................................... 8

1

INTEREST OF THE AMICI CURIAE 1

The Securities Industry and Financial Markets

Association (“SIFMA”) is the leading trade association

for broker-dealers, investment banks, and asset

managers operating in the U.S. and global capital

markets. SIFMA advocates on behalf of the industry’s

one million employees with regard to legislation,

regulation, and business policy affecting retail and

institutional investors, equity and fixed-income

markets, and related issues. As part of this advocacy,

SIFMA frequently files amicus curiae briefs in this

Court.

The Chamber of Commerce of the United States of

America (“Chamber”) is the world’s largest business

federation.

It represents approximately 300,000

direct members and indirectly represents the

interests of more than three million companies and

professional organizations of every size, in every

industry sector, and from every region of the country.

An important function of the Chamber is to represent

the interests of its members in matters before

Congress, the Executive Branch, and the courts. To

that end, the Chamber regularly files amicus curiae

briefs in this Court.

The Bank Policy Institute (“BPI”) is a nonpartisan

policy, research, and advocacy group. BPI’s members

include universal banks, regional banks, and major

1 Pursuant to this Court’s Rule 37.6, counsel for amici curiae

certifies that no party or counsel for a party authored this brief

in whole or in part. No entity, aside from amici, their members,

and their counsel, made any monetary contribution toward the

preparation or submission of this brief. Counsel of record

received timely notice of this brief.

2

foreign banks doing business in the United States.

BPI produces academic research and analysis on

regulatory and monetary policy topics and analyzes

and comments on proposed regulations. Issues of

focus include consumer protection, the ability of banks

to best serve their communities, bank examination,

bank power, access to banking services, competition in

the financial sector, and capital and liquidity

regulation. An important function of BPI is to

represent its members in courts. To that end, BPI

regularly files amicus curiae briefs in cases, like this

one, that raise issues of concern to the nation’s

banking industry.

This case is deeply important to financial

institutions and businesses in the United States. The

decision below eviscerates a shield Congress enacted

to exclude securities fraud from claims under the

Racketeer Influenced and Corrupt Organizations Act

(“RICO”). Congress enacted this shield because civil

RICO claims had, as the SEC repeatedly warned,

functionally nullified nearly all securities law

regarding private suits by providing expanded

remedies and lower standards of liability for the same

conduct.

The results of this nullification were

catastrophic for both the securities industry and

American businesses. Amici oppose a return to that

era.

INTRODUCTION AND

SUMMARY OF ARGUMENT

This Court has long acknowledged that RICO’s

private cause of action “has … evolved into something

quite different from the original conception of its

enactors.” Med. Marijuana, Inc. v. Horn, 604 U.S. 593,

3

613 (2025). Enacted in 1970 to combat organized

crime, RICO soon created a sprawling industry of

suits alleging fraud in ordinary commercial disputes

against legitimate businesses.

This case involves a provision Congress enacted to

contain this excess in an area that has been

particularly beset with vexatious litigation: securities

fraud. After RICO’s enactment, plaintiffs began

restyling securities-fraud claims as civil RICO claims

that threatened treble damages and attorney’s fees.

Then, as part of the Private Securities Litigation

Reform Act (“PSLRA”), Congress enacted the “PSLRA

bar,” a broad exclusion from RICO liability for any

“conduct that would have been actionable as fraud in

the purchase or sale of securities.”

18 U.S.C.

§ 1964(c). Up until now, courts have interpreted this

provision to mean what it says: if conduct would be

“actionable as [securities] fraud,” it cannot be the

predicate for a RICO suit.

The decision below, however, departed from this

consensus and gave the provision an atextual

construction that drastically narrows the protection it

affords from plaintiffs’ overreach. It ruled that the

PSLRA bar does not apply to plaintiffs who cannot

themselves sue under securities laws, even if the

relevant “conduct … would have been actionable as

[securities] fraud,” id., in a suit brought by someone

else.

As the petition explains, this interpretation flouts

text and history. See Pet. Br. 11–17. And it splits with

decisions from the First, Second, and Ninth Circuits,

each of which has held that whether a particular

plaintiff in a case could have brought suit under

4

securities laws is irrelevant to the PSLRA bar. Id. at

20–24; infra at 20–22. That is reason enough to grant

the petition.

Amici submit this brief to emphasize two further

points favoring review. First, the pre-PSLRA history

of securities litigation under RICO demonstrates the

important function of the PSLRA bar and the error in

the lower court’s interpretation. For nearly a century,

Congress, this Court, and the SEC have taken care—

within their respective spheres of authority—to limit

private securities suits. As this Court has repeatedly

explained, these limits exist because claims of

securities fraud are especially prone to abuse. Civil

RICO, with its broad liability provisions and generous

remedies, allowed plaintiffs to circumvent these

limits. The flood of vexatious securities suits that

followed was catastrophic for business, the judicial

system, and the SEC’s ability to enforce securities

laws. The PSLRA bar was enacted after sustained

critiques from all three branches of government, and

it restored the primacy of securities law over

securities litigation.

By holding that the PSLRA bar does not apply when

the limits on securities litigation would preclude suit

by a given plaintiff, the decision below undoes this

careful work. It reopens the floodgates to suits by

private plaintiffs who, by design, could not sue under

the securities laws, allowing plaintiffs to repackage

such claims as civil RICO predicates. That is a

perverse reading of the PSLRA bar. The classes of

plaintiffs that the ruling below greenlights are

significant. And the damage, both to securities

enforcement and to public equity markets, will be as

extensive as it was prior to the PSLRA bar.

5

Second, there is no reason to delay resolving the

issue. The decision below splits with three other

circuits on a pure issue of statutory interpretation.

The Eleventh Circuit, which has one of the strongest

prior panel precedent rules in the country and

declined to resolve this issue en banc, will not change

its position. And RICO’s nationwide venue provisions

will allow plaintiffs to rush to the Eleventh Circuit

with RICO complaints that repackage securities fraud

allegations—which will both exacerbate the

unpredictability and burden for companies and make

it far less likely that any new circuit will address the

issue.

This Court should grant the petition.

ARGUMENT

I.

THE HISTORY OF CIVIL RICO AND THE PSLRA

BAR HIGHLIGHT THE NEED FOR REVIEW AND THE

ERROR OF THE LOWER COURT

A. The PSLRA Bar Was Enacted in the Wake

of Severe Abuse by Civil RICO Plaintiffs

Alleging Securities Fraud.

1. This Court has long recognized that private

securities suits “present[] a danger of vexatiousness

different in degree and in kind from that which

accompanies litigation in general.” Cent. Bank of

Den., N.A. v. First Interstate Bank of Den., N.A., 511

U.S. 164, 189 (1994). The “very pendency of ” a

securities suit “may frustrate or delay normal

business activity of the defendant” totally unrelated to

the lawsuit. Merrill Lynch, Pierce, Fenner & Smith

Inc. v. Dabit, 547 U.S. 71, 80–81 (2006). And these

suits necessarily implicate “extensive discovery of

business documents” and corporate officers, exacting

6

further costs to litigants. Blue Chip Stamps v. Manor

Drug Stores, 421 U.S. 723, 741 (1975); see A.C.

Pritchard, Markets as Monitors, 85 Va. L. Rev. 925,

952–59 (1999).

The upshot is that even “plaintiffs with weak

claims” in securities suits can “extort settlements

from innocent companies.” Stoneridge Inv. Partners,

LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 163

(2008). Indeed, “virtually all securities fraud claims

that survive initial motions practice will be settled.”

Neil Gorsuch & Paul Matey, Settlements in Securities

Fraud Class Actions: Improving Investor Protection 31

(Wash. Legal Found. 2005). 2 And the costs of these

settlements, as well as “ripple effects” like falling

share prices, are ultimately “incurred by the

company’s investors, the intended beneficiaries” of

securities laws. Cent. Bank, 511 U.S. at 189; see

Gorsuch & Matey, supra, at 8–9 & n.23 (collecting

authority).

Accordingly, Congress, this Court, and the SEC

have long understood that “[p]rivate securities fraud

actions … if not adequately contained, can be

employed abusively to impose substantial costs on

companies and individuals whose conduct conforms to

the law.” Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551

2 Between 1997 and 2024, only 0.4% of securities-fraud class-

action filings (21 suits) went to trial, while nearly half of the

remaining suits (46%) settled. See Stan. L. Sch. Secs. Class

Action Clearinghouse & Cornerstone Res., Securities Class

Action Filings: 2024 Year in Review 16 (2025). Because the

motivation is to avoid litigation rather than an adverse

judgment, “expected trial outcomes seem to have little if any

influence on the settlement amount.” Janet C. Alexander, Do the

Merits Matter? A Study of Settlements in Securities Class Actions,

43 Stan. L. Rev. 497, 596 (1991).

7

U.S. 308, 313 (2007). Over time, all three branches

have imposed safeguards to try to contain this abuse,

giving careful attention to such requirements as

standing, scienter, causation, and materiality. See,

e.g., Arthur N. Mathews, Shifting the Burden of

Losses in the Securities Markets: The Role of Civil

RICO in Securities Litigation, 65 Notre Dame L. Rev.

896, 937 (1990).

2.

For a time, RICO circumvented these

safeguards on private securities enforcement. While

Congress enacted RICO to combat organized crime,

nothing in the statute limited suits to those

defendants. Plaintiffs instead could claim RICO

violations by alleging fraud related to a massive range

of activity, including “in the sale of securities.” 18

U.S.C. § 1961(1). And if they prevailed, they were

guaranteed treble damages and attorney’s fees. Id.

§ 1964(c).

Chief Justice Rehnquist identified the obvious

implication: “Any good lawyer who can bring himself

within the terms of [civil RICO’s] provisions will [use

it] because of the prospect of treble damages and

attorney’s fees.” William H. Rehnquist, Remarks of

the Chief Justice, 21 St. Mary’s L.J. 5, 10 (1989). And

civil RICO’s “terms,” he added, had “a tremendous

reach.” Id. at 11.

By the early 1980s, litigants had discovered the

statute’s utility, leading to “an explosion of civil RICO

litigation.” Sedima, S.P.R.L. v. Imrex Co., Inc., 741

F.2d 482, 486 (2d Cir. 1984), rev’d, 473 U.S. 479

(1985).

Securities fraud was a major catalyst,

accounting for 40% of civil RICO suits by 1984. See

Sedima, 473 U.S. at 499 n.16. As one SEC Chairman

8

observed, civil RICO “turned virtually every securities

fraud claim into a potential RICO claim.” RICO

Reform: Hearings before the Subcomm. on Criminal

Justice of the H. Comm. on the Judiciary, 99th Cong.

445–46 (1985) (statement of John Shad, Chairman,

SEC). And because of “the incentives that RICO

provides plaintiffs, … RICO claims in securities cases

ha[d] become the rule, rather than the exception.” Id.

Judges chafed at civil RICO’s rise. When Chief

Justice Rehnquist called for strict limits on civil

RICO, one prominent jurist admitted that he “may

well have been speaking for all of us.” David B.

Sentelle, Civil RICO: The Judges’ Perspective, 12

Campbell L. Rev. 145, 146 (1990) (citing William H.

Rehnquist, Get RICO Cases Out of My Courtroom,

Wall St. J., May 19, 1989, at A-14); see also, e.g., Ralph

K. Winter, Paying Lawyers, Empowering Prosecutors,

and Protecting Managers, 42 Duke L.J. 945, 978

(1993) (calling for repeal or severe limitations).

Others were more colorful, deriding RICO’s generous

civil remedies as a “runaway treble damage bonanza

for the already excessively litigious,” Schacht v.

Brown, 711 F.2d 1343, 1361 (7th Cir. 1983), and its

capacious liability standard as “one of the most

confusing crimes ever devised by the United States

Congress,” Casey v. Dep’t of State, 980 F.2d 1472, 1477

(D.C. Cir. 1992) (Silberman, J.).

This criticism paralleled “mounting controversy”

among lower courts regarding whether and how to

limit RICO claims. Dan River, Inc. v. Icahn, 701 F.2d

278, 291 (4th Cir. 1983). Some courts, for example,

required plaintiffs to prove defendants had some

affiliation with organized crime or establish that they

9

were injured in particular ways. See Note, Civil RICO,

95 Harv. L. Rev. 1101, 1105–14 (1982).

One prominent effort at limitation was the Second

Circuit’s decision in Sedima. 741 F.2d at 503. There,

the court held that civil RICO requires establishing

“criminal convictions on the underlying predicate

offenses.” Id. at 503. Central to its decision was a

refusal to impose liability when “Congress was not

aware of the possible implications of” civil RICO,

which were “extraordinary, if not outrageous.” Id. at

487, 492.

This Court reversed. See 473 U.S. at 493. Both

the majority and dissent agreed with the Second

Circuit’s factual premise—that RICO had “evolv[ed]

into something quite different” than Congress

expected. Id. at 500 (majority op.); see id. at 500–01

(Marshall, J., dissenting). They differed, however, on

whether that mattered. According to the majority,

RICO’s “correction must lie with Congress.” Id. at

499. Justice Marshall, speaking for himself and three

others in dissent, would have limited the cause of

action. Id. at 501. He emphasized, in particular, civil

RICO’s effect on securities litigation, warning that the

majority’s interpretation, which allowed civil RICO

claims to proceed on nebulous allegations of mail and

wire fraud, would displace the limited remedies in

securities laws with treble damages and attorney’s

fees.

He further warned that the majority’s

interpretation “virtually eliminates decades of

legislative and judicial development of private civil

remedies under the federal securities laws,” including

on “matters such as standing, culpability, causation,

reliance, and materiality.” Id. at 504–05.

10

Not surprisingly, Sedima further opened the

floodgates to civil RICO suits. See Sentelle, supra, at

148. Opposition grew as well. The SEC called for the

exclusion of securities fraud from civil RICO liability,

a position it would hold across three administrations

and three separate chairmen. 3 The SEC warned that

civil RICO was “substantially altering the balance of

private and public rights and remedies under the

securities laws, which Congress, the courts, and the

Commission have crafted over the past 50 years.”

Shad, supra, at 446. Indeed, “the civil RICO statute

ha[d] preempted much of the field.” Id. at 445.

3. Sedima’s holding, as well as its majority and

dissenting opinions, would take center stage when

Congress enacted the PSLRA. In response to Sedima,

that statute clarified that a criminal conviction was in

fact required to sue for securities fraud under civil

RICO: “[N]o person may rely upon any conduct that

would have been actionable as fraud in the purchase

or sale of securities to establish a violation” under

RICO, except that suits may proceed against “any

person that is criminally convicted in connection with

the fraud.” 18 U.S.C. § 1964(c).

When introducing the amendment, its author

confirmed what text already made clear: Congress

was acting “because [Sedima’s] majority said it is

3 See Shad, supra, at 446, 450; Securities Investor Protection

Act of 1991: Hearings on S. 1533 Before the Subcomm. on

Securities of the S. Comm. on Banking, Housing & Urban Affairs,

102nd Cong., 1st Sess. 9, 14 (1991) (statement of Richard

Breeden, SEC Chairman); Common Sense Legal Reform Act:

Hearings Before the Subcomm. on Telecomm. & Fin. of the H.

Comm. on Commerce, 104th Cong. 196 (1995) (statement of

Arthur Levitt, SEC Chairman).

11

really Congress’s mistake, Congress should fix it.”

141 Cong. Rec. 7142 (1995) (statement of Rep. Cox).

And Justice Marshall’s dissent was repeatedly cited in

support of the amendment. See id. at 7134–43

(liberally quoting and repeatedly emphasizing

reliance on Justice Marshall’s warnings regarding the

circumvention of securities law).

The amendment was effective. Courts recognized

that it “removed securities fraud as a predicate act

under RICO.” Anza v. Ideal Steel Supply Corp., 547

U.S. 451, 472 (2006) (Thomas, J., concurring in part

and dissenting in part). In case after case, they

rejected attempts to circumvent that categorical bar.

See, e.g., Powers v. Wells Fargo Bank NA, 439 F.3d

1043, 1045 (9th Cir. 2006) (bar applies to both

individual and class actions); Howard v. AOL Inc., 208

F.3d 741, 749 (9th Cir. 2000) (bar covers securities

fraud claims by plaintiffs who lack standing to sue

under the securities acts); Bald Eagle Area Sch. Dist.

v. Keystone Fin., Inc., 189 F.3d 321, 329–30 (3d Cir.

1999) (plaintiffs cannot rely on alleged wire or mail

fraud “undertaken to keep a securities fraud Ponzi

scheme alive”).

*

*

*

The story of the PSLRA bar is thus the story of how

all three branches responded to the explosive

combination of vexatious securities suits and civil

RICO’s breadth. Civil RICO was obliterating the

reticulated limits on private securities suits. When

this Court recognized that civil RICO could not

support a narrower interpretation, it invited Congress

to resolve the issue. And Congress did. That solution

was effective for decades.

12

B. The Eleventh Circuit’s Rule Will Open

the Floodgates to Securities Fraud

Claims That Should Be Barred and

Burden Public Companies and Their

Advisors.

In a single paragraph, the decision below unwound

much of the PSLRA bar and reopened the floodgates

that it had shut. It concluded that the bar does not

apply when the plaintiff bringing the suit “cannot sue

under the securities laws,” Pet. App. 56a, regardless

of whether the “conduct … would have been actionable

as fraud in the purchase or sale of securities,” 18

U.S.C. § 1964(c). Whenever a plaintiff cannot bring a

securities fraud claim because of one of the limits on

securities suits imposed over the years by Congress,

courts, and the SEC, that plaintiff can just turn

around and sue under civil RICO, receiving the

benefits of its more lenient standards and more

generous remedies. This negative outcome was

precisely what drew widespread opposition from

leaders in all three branches of government. And for

similar reasons, it is equally important for this Court

to grant review to undo this perverse rule.

1. By circumventing the limits Congress, this

Court, and the SEC set on securities litigation, the

rule below will open the gates to a new wave of

vexatious litigation. Securities laws limit private

fraud claims to particular plaintiffs. Even where

particular conduct may constitute securities fraud,

that conduct is not actionable by all parties that might

otherwise have Article III standing to sue.

Eliminating these limits will have far-reaching

consequences on securities litigation.

13

Consider two important exclusions in securities

litigation: the purchaser/seller rule and the aidingand-abetting bar. Both limits have been repeatedly

endorsed and enforced by this Court and Congress.

The first limits private civil remedies for securities

fraud to purchasers and sellers. See Blue Chip, 421

U.S. at 735–36. Thus, plaintiffs cannot sue by

alleging that they held onto or never purchased

securities because of fraudulent misrepresentations

or omissions regarding the security. Id. at 737–38.

The second shields would-be defendants from aidingand-abetting suits by private plaintiffs. See Cent.

Bank, 511 U.S. at 178–79. That is, private plaintiffs

cannot bring suit against those who purportedly

“provide[] substantial assistance” to someone

violating securities law. 15 U.S.C. § 78t(e).

In both cases, the conduct in question constitutes

securities fraud, and it is actionable when brought by

certain plaintiffs.

The purchaser/seller rule, by

definition, allows purchasers and sellers (as well as

the SEC) to sue for securities fraud. See Blue Chip,

421 U.S. at 751 n.14. And the SEC is expressly

authorized to sue for aiding-and-abetting violations.

15 U.S.C. § 78t(e). But again, many plaintiffs cannot

sue under securities laws to complain of this same

conduct—mere holders of a security, for example, or a

private plaintiff with an aiding-and-abetting claim.

And under the rule adopted by the First, Second, and

Ninth Circuits, the PSLRA bar stops such plaintiffs

from turning to civil RICO. See infra at 20–22. But

under the Eleventh Circuit’s approach, anyone

precluded by these limits can sue under civil RICO, as

long as they allege that they were somehow harmed

by securities disclosures.

14

It is hard to overstate the extent to which this

distinction enlarges securities litigation. As this

Court found, the demolition of the purchaser/seller

rule will “broadly expand[]” securities litigation to a

“vastly larger world of potential plaintiffs,” namely,

“the world at large.” Blue Chip, 421 U.S. at 733 n.5,

741, 743. Indeed, numerous courts (including the

Eleventh Circuit) held after Sedima that the

purchaser/seller rule did not apply to limit securities

fraud claims under civil RICO. See, e.g., Warner v.

Alexander Grant & Co., 828 F.2d 1528, 1530 (11th Cir.

1987). The PSLRA bar put an end to such RICO suits,

but now the door will be open to them again. That will

render the purchaser/seller rule a functional nullity—

precisely the result that Justice Marshall predicted in

his Sedima dissent and that Congress passed the

PSLRA bar to avoid. See 473 U.S. at 505 (Marshall,

J., dissenting). Indeed, the plaintiffs’ bar will be

incentivized to find plaintiffs that cannot bring

securities claims in order to sue under RICO,

unlocking treble damages and other benefits.

Just as eliminating the purchaser/seller rule

expands the pool of future plaintiffs, allowing suits

against alleged aiders and abettors greatly expands

the defendants’ side of securities litigation, exposing

“the entire marketplace” to vexatious suits.

Stoneridge, 552 U.S. at 162. Prior to Central Bank,

plaintiffs relied heavily on aiding-and-abetting suits.

By extending liability to outside advisors on securities

transactions—such as law firms, accounting firms,

and experts—aiding-and-abetting liability offered

plaintiffs an exponentially larger, more attractive,

and more solvent range of “deep pockets” to pursue.

Mathews, supra, at 937. Even though Congress and

15

this Court have since excluded these defendants from

private suits under securities laws, see 15 U.S.C.

§ 78t(e); Cent. Bank, 511 U.S. at 180, the Eleventh

Circuit’s rule makes them viable targets again under

civil RICO.

Between holder claims and aiding-and-abetting

suits, the decision below likely authorizes more suits

than the PSLRA bar still precludes. See Blue Chip,

421 U.S. at 742–43 (noting that the plaintiff classes

outside of purchasers and sellers are “vastly larger”

than the purchaser/seller class itself). That risks a

return to RICO’s “preempt[ion] of much of the field” of

securities regulation. Shad, supra, at 445. That is an

important issue worthy of this Court’s review.

2. Discarding the balances struck in securities law

will also come at a tremendous economic cost. A

longstanding and concerning trend in capital markets

is an increasing corporate preference for foreign

markets. See, e.g., Craig Doidge et al., Are There Too

Few Publicly Listed Firms in the US? 17–18 (NBER

2025); Michael R. Bloomberg & Charles E. Schumer,

Sustaining New York’s and the U.S.’ Global Financial

Services Leadership ii, 5, 12, 43–54 (2006) (collecting

authorities). A material contributor to this decline is

the litigation risk that publicly listed companies face

in the United States relative to competitor markets.

See, e.g., Bloomberg & Schumer, supra, at 16–17.

Securities suits alone have a significant effect on this

competitiveness. See, e.g., Jonathan Brogaard et al.,

Does Shareholder Litigation Risk Cause Public Firms

to Delist? Evidence from Securities Class Action

Lawsuits, 59 J. Fin. & Quant. Analysis 1726, 1754

(2024).

16

The dramatic expansion of eligible plaintiffs and

defendants in securities litigation, as well as the

availability of treble damages in these suits, will only

exacerbate this trend. This Court recognized as much

when imposing the very limits that the decision below

unwound on the implied cause of action for securities

fraud. Without the purchaser/seller rule, a new class

of plaintiffs can sue, even though they “pose a special

risk of vexatious litigation” above and beyond existing

securities-fraud litigants. Merrill Lynch, 547 U.S. at

86; see Blue Chip, 421 U.S. at 742–43. And this new

class, again, is “vastly larger” than the plaintiffs who

can legitimately sue for securities fraud, threatening

a massive increase to already material securities

litigation costs. Id.

Similarly, as this Court has warned, expanding the

class of potential defendants to alleged aiders and

abettors risks expansive “ripple effects” from

“uncertainty and excessive litigation.” Cent. Bank,

511 U.S. at 189. Most directly, “[o]verseas firms with

no other exposure to [U.S.] securities laws could be

deterred from doing business here,” which could “raise

the cost of being a publicly traded company under

[U.S.] law and shift securities offerings away from

domestic capital markets.” Stoneridge, 552 U.S. at

164. More broadly, there will be a chilling effect on

the professional advice needed to operate as a public

company as advisors are placed in RICO’s crosshairs.

Cent. Bank, 511 U.S. at 189; see, e.g., Thomas L.

Gossman, The Fallacy of Expanding Accountants’

Liability, 1 Colum. Bus. L. Rev. 213, 215, 230 (1988)

(discussing the “alarming[]” increase in aiding-andabetting suits predicated on securities fraud against

17

accountants and the “virtual[] collapse” of the

insurance market for most accounting firms).

The decision below, in sum, threatens grave

consequences for the securities industry and, indeed,

the national economy. This Court should grant

certiorari to determine whether the law truly requires

these consequences.

C. The Origin and Statutory Context of the

PSLRA Bar Underscore that the

Eleventh Circuit Decision is Wrong.

The Eleventh Circuit’s interpretation of the

PSLRA bar cannot be defended as a matter of text or

history. See Pet. Br. 11–19. Understanding the origin

of the PSLRA and its statutory context confirms that

the ruling below is erroneous.

1. Under the decision below, the PSLRA bar

prevents plaintiffs with legitimate securities-law

claims from using RICO, yet permits the most abusive

and vexatious litigants to pursue RICO’s favorable

remedies. See Merrill Lynch, 547 U.S. at 86 (rejecting

this inference). Consider again the purchaser/seller

rule and aiding-and-abetting bar. This Court has

emphasized that these rules guard against especially

problematic classes of securities suits.

Start with suits by non-purchasers and nonsellers. It is a statistical fact that securities suits that

survive motions practice overwhelmingly settle,

creating clear incentives for vexatious litigation. See

Stan. Clearinghouse, supra, at 16; Gorsuch & Matey,

supra, at 31.

These incentives are even more

pronounced in suits by plaintiffs alleging they did not

take a particular action. These suits “turn largely on

18

which oral version of a series of occurrences the jury

may decide to credit … no matter how improbable the

allegations of the plaintiff.” Blue Chip, 421 U.S. at

742. They are thus “virtually impossible to dispose of

prior to trial other than by settlement.” Id.

Aiding-and-abetting liability raises similar

concerns. As this Court has explained, “the rules for

determining aiding and abetting liability are unclear,”

creating a “shifting and highly fact-oriented” analysis

for each case. Cent. Bank, 511 U.S. at 188. In that

context, “plaintiffs with weak claims [can] extort

settlements,” Stoneridge, 552 U.S. at 163, because

“uncertainty” leads “entities subject to secondary

liability as aiders and abettors … to abandon

substantial defenses and to pay settlements in order

to avoid the expense and risk of going to trial,” Cent.

Bank, 511 U.S. at 189.

The Eleventh Circuit’s approach disregards these

long-recognized consequences. Indeed, this very case

falls into a category—“holder” suits—that this Court

has recognized “pose[s] a special risk of vexatious

litigation.” Merrill Lynch, 547 U.S. at 86. Yet the fact

that “the plaintiff bondholders [had] merely held their

investments,” and so could not assert securities-law

claims, was the reason that the Eleventh Circuit held

their civil RICO claims were not subject to the PSLRA

bar.

See Pet. App. 56a.

That turns the

purchaser/seller rule on its head, which cannot be

squared with “the particular concerns that

culminated in [the PSLRA’s] enactment.” Merrill

Lynch, 547 U.S. at 86 (refusing to interpret a related

securities reform to exempt “holder” suits).

19

2. The decision below also missed that the PSLRA

bar was enacted to override Sedima. See supra at 10–

11. When “the object of [a statutory amendment] is to

displace this Court’s conclusion” in a prior decision,

that is an important interpretive consideration.

Young v. UPS, Inc., 575 U.S. 206, 246 (2015) (Scalia,

J., dissenting); accord id. at 230–31 (majority op.)

(same). And here, it weighs heavily against the

decision below.

The entire point of the PSLRA bar was to reverse

civil RICO’s “virtual[] eliminat[ion]” of “decades of

legislative and judicial development of private civil

remedies under the federal securities laws.” Sedima,

473 U.S. at 505 (Marshall, J., dissenting). The bar did

so by reversing Sedima’s holding that “the fact that …

defendants have not been convicted under RICO or

[predicate criminal statute] does not bar [the

plaintiff’s] action.” 473 U.S. at 493 (majority op.).

This “almost verbatim” correction “leav[es] no dispute

that, at a minimum, [it] serves to abrogate” Sedima.

Rubin v. Islamic Republic of Iran, 583 U.S. 202, 211

(2018). And yet the decision below reinstates Sedima

for wide swaths of the least-viable plaintiffs. That

makes little sense.

3. Finally, the lower court’s reading of the PSLRA

bar is at odds with the PSLRA’s aiding-and-abetting

provisions. As noted, the express causes of action in

the securities acts excluded aiding-and-abetting

liability. See Cent. Bank, 511 U.S. at 179. When this

Court took the same approach for implied causes of

action, see id., some called for Congress to reinstate

this form of liability for private litigants, see S. Rep.

No. 104-98, at 19 (1995). In the PSLRA, Congress

adopted a different approach, authorizing only the

20

SEC to sue for aiding and abetting. See 15 U.S.C.

§ 78t(e).

This Court has recognized that § 78t(e) reflected a

deliberate decision to “restor[e] aiding and abetting

liability in certain cases but not others.” Stoneridge,

552 U.S. at 163; accord S. Rep. No. 104-98, at 19. It

has thus declined to allow theories of liability that

“would revive in substance [suits] against all aiders

and abettors.” Stoneridge, 552 U.S. at 162–63. Doing

so would “undermine Congress’s determination that

this class of defendants should be pursued by the SEC

and not by private litigants.” Id. at 163.

The decision below reads the PSLRA bar—a

provision enacted at the same time as § 78t(e)—to do

just what this Court rejected in Stoneridge. According

to the Eleventh Circuit’s logic, because the SEC

alone—and not private litigants—can pursue aiders

and abettors under securities laws, private litigants

may now bring civil RICO claims for that exact

conduct. That is a nonsensical way to read the

statutory scheme. Congress would not have made a

deliberate choice to limit aiding-and-abetting liability

to SEC enforcement in § 78t(e), only to then allow

plaintiffs to nullify that choice by bringing “in

substance” the same claim (with better remedies)

under civil RICO. Stoneridge, 552 U.S. at 162.

II. THIS COURT SHOULD RESOLVE

CIRCUIT SPLIT NOW.

THE

CLEAR

1. The decision below clearly split with three other

circuits regarding the PSLRA bar’s scope. It reversed

dismissal of claims alleging that fraudulent

misstatements and omissions caused the plaintiffs to

continue to hold securities in a failing company. See

21

Pet. App. 7a–8a, 56a. And it did so because “‘holding’

an investment—maintaining one’s stake in company

X—does not offer grounds to sue under the federal

securities laws.” Id.

Three circuits have rejected this rationale when

disallowing similar suits. In MLSMK Investment Co.

v. JP Morgan Chase & Co., the Second Circuit

considered a plaintiff’s attempt to plead civil RICO

claims based on aiding and abetting securities fraud,

which the plaintiff noted “cannot serve as a basis for

a private right of action.” 651 F.3d 268, 274 (2d Cir.

2011). The “determinative question” was “whether

the [PSLRA] bars all RICO claims that would have

been actionable as fraud in the purchase or sale of

securities, … or only RICO claims in cases where that

plaintiff could have asserted a fraud claim against the

named defendant.” Id. And the court held that the

PSLRA bar precludes “RICO claims alleging predicate

acts of securities fraud, even where a plaintiff cannot

itself pursue a securities fraud action against the

defendant.” Id. at 277. It stressed that “the plain

language of the statute does not require that the same

plaintiff who sues under RICO must be the one who

can sue under securities laws.” Id.

The First Circuit reached the same result when

considering a plaintiff who argued she “would not

have had standing to bring [a securities suit] because

she was not injured by” the alleged securities fraud.

Lerner v. Colman, 26 F.4th 71, 78 (1st Cir. 2022). The

court agreed with the Second Circuit’s “hold[ing] that”

the PSLRA bar applies “even where a plaintiff cannot

itself pursue a securities fraud action against the

defendant.” Id. at 79. It added that the “bar is … not

concerned with whatever universe of conduct is

22

specific to the RICO plaintiff’s injury, but with the

broader universe of conduct that would be necessary

to ‘establish’ the underlying violation.” Id.

Finally, the Ninth Circuit also disagreed with

plaintiffs who alleged securities fraud and argued

that the PSLRA bar did “not apply because they lack

standing to bring securities fraud claims.” Howard,

208 F.3d at 749. Here too, the Ninth Circuit held that

the bar applied because the “claims could be brought

by a plaintiff with proper standing.” Id.

Had any one of these decisions been previously

issued by the Eleventh Circuit, it would have bound

the panel below. The “determinative question” below

was the same question at issue in MLSMK, Lerner,

and Howard: “whether the [PSLRA] bars all RICO

claims that would have been actionable as fraud in the

purchase or sale of securities, … or only RICO claims

in cases where the plaintiff could have asserted a

fraud claim against the named defendant.” MLSMK,

651 F.3d at 274. MLSMK, Lerner, and Howard held

that the former was true. The decision below held

that the latter was true. There is no way to reconcile

these decisions.

2. There is no reason to defer the resolution of this

question.

This case squarely raises the issue

presented. It, like MLSMK, Lerner, and Howard, was

decided at the pleading stage and turned on the

meaning of the PSLRA bar.

And the circuit split is unlikely either to resolve

itself or to further mature. The Eleventh Circuit

adheres to a strong prior panel precedent rule,

without the “erosion” that has affected the rule in

other circuits. Bryan A. Garner et al., The Law of

23

Judicial Precedent 492 (2016). It brooks no exception

for any “defect in the prior panel’s reasoning or

analysis,” and any necessary reasoning of a prior

decision broadly binds panels whenever the later

holding would “necessarily mean” the prior decision

“was wrong.” United States v. Hicks, 100 F.4th 1295,

1301 (11th Cir. 2024). The only courts that can

resolve the split are the en banc Eleventh Circuit and

this Court. See id. And the Eleventh Circuit denied

petitioner’s en banc petition raising the issue. See

C.A. En Banc Pet. 8–14. That leaves this Court.

At the same time, further percolation is both

unlikely and unnecessary. It is unlikely because

RICO’s unusually broad venue provision allows suit

anywhere a defendant “resides, is found, has an agent,

or transacts his affairs.” 18 U.S.C. § 1965(a). And

securities actions are nationwide in scope, almost

always involving allegations of misrepresentation in

public filings related to securities listed on national

exchanges. Now that the Eleventh Circuit has made

it easy to circumvent the PSLRA bar, future plaintiffs

will have no reason to roll the dice elsewhere. After

all, they can effectively guarantee settlement by

surviving motions practice in the Eleventh Circuit.

Percolation is unnecessary because the question

presented raises a straightforward issue of statutory

interpretation that has been fully aired in lower court

decisions. The First and Second Circuits in particular

addressed the PSLRA bar’s text and history at length.

See MLSMK, 651 F.3d at 274–80; Lerner, 26 F.4th at

78–81. There would thus be no benefit to waiting.

There will, however, be tremendous cost to every

stakeholder but plaintiffs so long as the decision below

stands.

24

CONCLUSION

The petition for a writ of certiorari should be

granted.

November 3, 2025

Respectfully submitted,

KEVIN CARROLL

CHARLOTTE H. TAYLOR

SECURITIES INDUSTRY AND Counsel of Record

FINANCIAL MARKETS

JOHN C. BRINKERHOFF JR.

ASSOCIATION

JONES DAY

1099 New York Ave., NW 51 Louisiana Ave., NW

Washington, DC 20001

Washington, DC 20001

(202) 879-3872

Counsel for the Securities

ctaylor@jonesday.com

Industry and Financial

Markets Association

Counsel for Amici Curiae

GREGG ROZANSKY

THE BANK POLICY

INSTITUTE

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Suite 1100 W

Washington, DC 20005

JENNIFER B. DICKEY

JANET GALERIA

U.S. CHAMBER

LITIGATION CENTER

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Washington, D.C. 20062

Counsel for The Bank

Policy Institute

Counsel for the Chamber

of Commerce of the United

States of America