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Abstract

This article critiques the development of a textualist theory in securities jurisprudence and analyzes the Central Bank of Denver v. First Interstate Bank of Denver decision, an example of the defects inherent in the application of a textualist approach. In addition, this article demonstrates how the development of textualist securities jurisprudence stemmed from decisions that casually rejected precedent and mischaracterized existing law, thereby resulting in a distortion of the legislature’s intent. An analysis of the Exchange Act demonstrates how the Central Bank Court’s myopic approach towards statutory interpretation led to its failure to analyze other relevant Exchange Act provisions, including the most relevant provision—section 20(a). In particular, the first section of this article, after briefly summarizing the Central Bank decision, provides a framework for a statutory critique by reviewing the popular theories of statutory interpretation. The second section addresses the forms of secondary liability available under the Exchange Act, all of which were affected by Central Bank. This section illustrates how the post-Central Bank cases confirmed the dissent’s and the commentators’ concerns over the viability of secondary liability under section 10(b). The third section questions the Central Bank Court’s adoption of textualist theory in light of its prior holdings concerning section 10(b)’s implied right of action, which followed a purposivist philosophy. The fourth section, in addition to addressing the decision’s internal inconsistency, reviews its sweeping application in order to demonstrate its failure to adequately analyze the intended role of secondary liability under the Exchange Act. The fifth and final section addresses the decision’s impact and calls for the revival of section 20(a) in order to follow the 73rd Congress’ intent in allowing secondary liability claims. Additionally, this section critiques the Private Securities Litigation Reform Act of 1995, which similarly distorted the 73rd Congress’ intent.

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