This is the Cato Daily Podcast for Monday, January 21st, 2008. I'm Caleb Brown.

Wall Street breathed a sigh of relief following a Supreme Court decision last week.

The case wasn't a sexy one, but the implications for the market were huge.

Cato Institute Senior Fellow in Constitutional Studies, Ilialia Shapiro breaks down the case.

On Tuesday, the court announced its decision in one of the biggest, if not the biggest,

securities case in decades. Now this isn't a sexy case. There's nothing about

abortion or affirmative action or some of these high profile issues that people

get excited about in terms of the Supreme Court, but it has huge ramifications for investors,

for the business community, and the economy as a whole.

In the case of Stone Ridge versus Scientific Atlanta,

in a 5-3 decision, Justice Breyer didn't take part, the court ruled in Stoneridge Investment Partners versus Scientific Atlanta that investors suing a third party that do business with a company that committed fraud against them cannot recover.

In fact, the way that the, this brings us to the larger point, to give you some some background the way that the SEC works in general,

the security exchange commission, the ways that our securities law works.

If a company, you know companies have to disclose various things to the public about their

accounting about their transactions about their

investments all these sorts of things if they fraudulently disclose something if they're cooking their books on their accounting

or something and the public investors rely on this to their detriment.

They lose money because of this fishy business.

And they can sue them for securities law violations.

This is as I was as I was saying a step beyond that so they're trying to sue not someone who's

making a public disclosure but someone who helped the company

making public disclosures commit fraud.

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