# Amicus Curiae Brief — Richards v. Lloyd's of London > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_1480%3A4 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 1998 - **Citation:** 525 U.S. 943 ## Text MOTION FILED JUN 3 1996 5 IN THE No. 97-1779 Supreme Court of the United States OCTOBER TERM, 1997 ALAN RICHARDS, ET AL., JOHN R. NORTON, Ill, ET AL., Petitioners, V. LLOYD’S OF LONDON AN UNICORPORATED ASSOCIATION, ET AL.. Respondents. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit BRIEF OF THE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION, INC. AMICUS CURIAE Karen M. O’Brien General Counsel Counsel of Record Daniel S. Kahl Associate Counsel North American Securities Administrators Association, Inc. 10 G Street NE, Suite 710 Washington, DC 20002 (202) 737-0900 No. 97-1779 IN THE Supreme Court of the United States OCTOBER 1 ERM, 1997 ALAN RICHARDS, ET AL., JOHN R. NORTON, III, ET AL., Petitioners, V. LLOYD’S OF LONDON AN UNICORPORATED ASSOCIATION, ET AL., Respondents. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit MOTION FOR LEAVE TO FILE BRIEF AS AMICUS CURIAE AUTHORITY TO FILE Request for permission to file an amicus curiae brief was solicited from the Petitioners and the Respondents. Petitioners granted permission, Respondents indicated they do not oppose the filing of the brief. The North American Securities Administrators Association, Inc. (“NASAA”) is the organization having as its members the securities regulators of the fifty states, the District of Columbia, Puerto Rico, the Canadian provinces and territories and the Republic of Mexico (“Members”). NASAA through its undersigned counsel, moves this Court pursuant to Rule 37 for leave permitting NASAA to file a brief as amicus curiae in the above-referenced petition for writ of certiorari. NASAA has an interest in this appeal for several reasons. First, all but a few states have residents that invested in Lloyd’s of London (“Names”), some of whom are Petitioners. Second, those same states participated in a national agreement in an effort to resolve claims by the Names. In addition, several states brought enforcement actions against the Respondents. Third, if certiorari is granted, this Court would be interpreting provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 that are virtually identical to a provision contained in the Uniform Securities Act, upon which state securities acts are modeled. Finally, the interpretation of the provisions could potentially have a deleterious effect on the ability of state securities regulators to protect their citizens. NASAA asserts that it is desirable for the Court to grant this motion for two primary reasons. First, NASAA is in the unique position as a member organization encompassing all the State securities regulators to inform the Court of the potential impact on state securities regulators’ efforts to protect investors. Additionally, any interpretive position taken by this Court on the provisions will establish precedent that most likely will be followed by state courts. NASAA respectfully requests that it be granted leave to appear as amicus curiae and be permitted to submit a brief for the Court’s consideration on the Petition for Writ of Certiorari. Dated this 3 day of June, 1998. KAREN M. O’BRIEN General Counsel North American Securities Administrators Association, Inc. 10 G Street, N.E., Suite 710 Washington, D.C. 20002 (202) 737-0900 QUESTION PRESENTED Whether provisions, included by Congress in two separate federal securities statutes, rendering void any agreement to waive compliance with those laws (“antiwaiver provisions”) can be dismissed by a United States court based on a public policy determination that a contractual choice of law provision compelling the application of a foreign law provides for similar, but not identical, substantive rights as the federal statutes. il TABLE OF CONTENTS Page CUES TIN PRESENTED 6d i BP Re Rr Ee Ei ooo os kk i RRS il of FR Bg ter ls Ol COR Pre iil STATEMENT OF INTEREST OF AMICUS CURIAE............. | SUMMARY OF THE ARGUMENT ..........cccccccccccccccccccssccess 3 PTE boi vive co esis ceeuesesnecesessecsrensesssaseeccaseneensesenuee 3 1. THE PUBLIC POLICY INTENT OF CONGRESS IS CLEAR AND EMBODIED IN THE UNAMBIGUOUSLY DRAFTED PST EW PAL Oe Pe Oeics bce convene cnusiscdcosdevonsses 4 Il. THE COURTS WRONGFULLY ESTABLISHED AN ALTERNATIVE STANDARD. oo cccccccccccccccccsccccss 7 Ill. CONGRESS IS THE APPROPRIATE BRANCH OF GOVERNMENT TO AMEND FEDERAL STATUTES AND TO PERMIT THE RECOGNITION OF FOREIGN LAWS...................... 9 IV. THE FEDERAL AGENCY RESPONSIBLE FOR FEDERAL SECURITIES LAWS HAS RECOGNIZED, IN PART, ONLY ONE OTHER COUNTRY'S LAWS" AS SIMILAR, AND IT IS NOT THE LAW OF SPU PUN UEM NG a skp anh evcsaphicdacatuancaveyecosiensenanaananey 10 Se ND av sahnaeik'es 0504s bea nioese eb eakaun dN kenaes ateaencodis 12 ill TABLE OF AUTHORITIES CASES Page(s) Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989) 20... .ccccccccenscnceenccesecoeccceseersesesens 8 Scherk v. Alberto-Culver Co., BUT UTS, SOG UGTA) occ ce ind sin ckncas sc cteesinsene sees scaneaasen’ S Shearson/American Express, Inc. v. McMahon, BOOT) SS, 220 CIGGT) noe ccccsuceecscvecnevecsacccstesvanssevsncenses 8 Wilco v. Swan, FAG US. 427 (1953) 2 5..0cc cc ceccsceccsensonccecensncascsereencess 8 STATUTES Securities Act of 1933 Ratan 14 ES UG. FI vckccscccinssnceccuctessens le ae Se. siete Fe 1 TT SO FIG coc uksvanncssiviadsceninrtadecdectscenss 10 Securities Exchange Act of 1934 Section 29(a), 15 U.S.C. 78cC(a) ......... ee ceeeeseee ee eeee ences 6 Uniform Securities Act of 1956 a Ne iolb'n ob dabeannnwasaatehapavese C ongress did not amend or diminish the antiwaiver provisions. Another manner in which Congress can facilitate the recognition of foreign laws is through treaties. Congress endorsed the North American Free Trade Agreement (“NAFTA”), as well as authorizing the continued rounds of negotiations on the General Agreement on Tariffs and Trade (“GATT”).'4 The general purpose of both NAFTA and GATT is to eliminate discrimination of foreign persons and entities in certain areas relating to cross-border trade and services by granting them the same treatment as domestic persons and entities (“national treatment”). The process by which the treaties are implemented ? See Report on the Implementation of IOSCO Resolutions, Int'l. Organ. of Sec. Comm. (July 29, 1996); COSRA Principles, Council of Sec. Regul. of the Americas (2d. ed 1996). f Capital Markets Deregulation and Liberalization Act of 1995, supra p.5. '* The North American Free Trade Agreement, H.R. Doc. No. 103-159, 103d Cong. I" Sess. (1993): General Agreement on Tariffs and Trade, H.R. Doc. No. 103-316, 103d Cong. 2™ Sess. (1994), 10 permits broad deference to local laws. ore For example, under both NAFTA and GATT the federa and state securities regulators identified various statutory provisions, rules and regulations that were “reserved” from compliance with the requirements of the treaties establishing equal treatment across jurisdictional borders. The reservations were identified because they reflected rights and obligations under the U.S. securities laws that are prudential in nature and central to the purpose of the federal and state securities acts. Essentially, the federal and state regulators indicated to Congress, as well as the other countries that are parties to the treaties, that the provisions that were reserved are different than the standards of the other countries, but crucial to U.S. securities markets. The antiwaiver provisions should be given the same deference. Congress should, if necessary, evaluate their continued purpose and focus. IV. THE FEDERAL AGENCY RESPONSIBLE FOR FEDERAL SECURITIES LAWS HAS RECOGNIZED, IN PART, ONLY ONE OTHER COUNTRY’S LAWS AS SIMILAR AND IT IS NOT THE LAW OF ENGLAND. Section 19(a) of the 1933 Act grants the SEC the authority “ _. from time to time to make, amend, and rescind such rules and regulations governing the registration statements and prospectuses for various classes of securities and issuers. . . ”'° Pursuant to this authority, in February of 1985, the SEC issued a concept release to solicit comment on a possible rulemaking initiative intended to facilitate cross-border offerings of securities by specified issuers 'S 15 U.S.C. § 77s(a)(1997). eT Se ee 1] that met certain tests.'° This concept, entitled the Multijurisdictional Disclosure System, was undertaken by the SEC to “remove unnecessary impediments to transnational capital formation without unduly disadvantaging U.S. issuers in the U.S. markets, while ensuring that those buying securities in the U.S. markets are afforded the protections intended by the Securities Act and the Exchange Act.”"’ The staff of the SEC thereafter began discussions with the staffs of the Ontario and Quebec securities commissions. Discussions with these Canadian provisions was stated as an obvious starting point based upon Canada’s “mature capital markets with a strong regulatory tradition.” The states, through NASAA, formed a special task force to work with the SEC and the provinces of Ontario and Quebec to determine what accommodations would be appropriate at the state level to facilitate use of the Multijurisdictional Disclosure system. The rules permitting the Multijurisdictional Disclosure System were adopted by the SEC in 1991.'? The NASAA members adopted a resolution in September of 1989 supporting the new effort.” Subsequent to the adoption of the new rules, the SEC had discussions with a few additional countries, but to no avail. '° Facilitation of Multinational Securities Offerings, Securities Act Release No. 6568, Fed. Sec. L. Rep. (CCH)§83,743 (March 1985). : Proposed Rules, Securities Act Release No. 6841, Fed. Sec. L. Rep. (CCH)784,432, at p. 80,282 (Aug. 1989), revised proposal 484,701(Nov. 1990). Id. Adoption of Proposed Rules, Securities Act Release No. 6902, Fed. Sec. L.Rep. (CCH) § 84,812 (July 1991). ~ NASAA Resolution Multijurisdictional Disclosure System Proposed by the U.S. Securities and Exchange Commission, NASAA Reports (CCH) § 7030A (Jan. 1993). 12 Similarities between those other countries securities laws were not significant enough to warrant consideration of extending the program. The fact that the Multijuridsictional Disclosure System was not extended to England bolsters the SEC’s argument in its amicus brief in the Ninth Circuit that English laws are not the substantive equivalent of U.S. securities laws as suggested by the circuit courts.?! Moreover, it is clear from the SEC’s rationale for pursuing the multijurisdictional system with the two specified Canadian provinces that, although reducing unnecessary impediments to capital formation efforts is important, such systems cannot begin without assuring that U.S. investors are afforded the protections intended by the federal acts. CONCLUSION The circuit courts have wrongfully applied a court substituted standard for a Congressional mandate. The antiwaiver provisions of both the federal and state securities laws were included purposefully and without compromise for strong public policy reasons that are even more important to the economic welfare of the U.S. today. With more and more small and unsophisticated investors relying upon the securities markets as another method to save for their future retirement or family needs, it is imperative to maintain the protections available under the U. S. securities laws. In addition, with the increasing use of Internet technology to communicate with persons on U.S. soil from locations far away, U.S. investors need the assurance that their rights under the U.S. securities laws that make the securities markets so attractive in the first place will be upheld. If the *! Brief of The Securities and Exchange Commission, Amicus Curiae, Richards v. Lloyd's of London, Nos. 95-55747, 95-56467 (9" Cir. May 5, 1996). 13 absolute application of these provisions is no longer appropriate due to the internationalization of the securities markets, Congress and the states, (or if within the delegated authority to the federal and state agencies that administer the securities laws, the SEC and state securities regulators), should revise the antiwaiver provisions accordingly. Until such time, the provisions stand and must be upheld as unambiguously as drafted. For the foregoing reasons, the Petition for Writ of Certiorari should be granted. Respectfully submitted, KAREN M. O’BRIEN General Counsel North American Securities Administrators Association, Inc. 10 G Street, N.E., Suite 710 Washington, D.C. 20002 (202) 737-0900 June 3, 1998 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_1480%3A4. Public record. Not legal advice.