N HE Supreme Court of the United States - Sturm College of …

1 No. 06-1341 IN THE Supreme Court of the United States _____ THE REGENTS OF THE UNIVERSITY OF CALIFORNIA, Petitioner, v. MERRILL LYNCH PIERCE FENNER & SMITH, INC.; MERRILL LYNCH & COMPANY, INC.; CREDIT SUISSE FIRST BOSTON (USA), INC.; CREDIT SUISSE FIRST BOSTON LLC; PERSHING LLC; BARCLAYS PLC; BARCLAYS BANK PLC; BARCLAYS CAPITAL INC., Respondents. _____ On petition for a Writ of Certiorari to the United States Court of Appeals for the Fifth Circuit _____ BRIEF IN OPPOSITION _____ RICHARD W. CLARY STUART J. BASKIN CRAVATH, SWAINE & SHEARMAN & STERLING LLP MOORE LLP 599 lexington Avenue Worldwide Plaza New York, NY 10022 825 Eighth Avenue (212) 848-4000 New York, NY 10019 (212) 474-1000 Counsel of Record for Respondents Credit Suisse First Boston (USA), Inc.

2 , Credit Suisse First Boston LLC and Pershing LLC Counsel of Record for Respondents Merrill Lynch Pierce Fenner & Smith, Incorporated and Merrill Lynch & Company, Inc. June 1, 2007 [Additional Counsel Listed on Inside Cover] DAVID H. BRAFF SULLIVAN & CROMWELL LLP 125 Broad Street New York, NY 10004 (212) 558-4000 Counsel of Record for Respondents Barclays PLC, Barclays Bank PLC and Barclays Capital Inc.

3 (i) PARTIES TO THE PROCEEDING Respondent Merrill Lynch & Company, Inc. is a publicly traded corporation. The parent corporation of respondent Merrill Lynch, Pierce, Fenner & Smith, Inc. is Merrill Lynch & Company, Inc. No publicly held corporation, other than Merrill Lynch & Company, Inc. owns 10% or more of the stock of Merrill Lynch, Pierce, Fenner & Smith, Inc. No publicly held corporation owns 10% or more of the stock of Merrill Lynch & Company, Inc. The following entities are parent corporations or publicly held corporations that own 10% or more of the stock of respondent Credit Suisse First Boston (USA), Inc.

4 (n/k/a Credit Suisse (USA), Inc.): Credit Suisse Group Credit Suisse Credit Suisse Holdings (USA), Inc. The following entities are parent corporations or publicly held corporations that own 10% or more of the stock of respondent Credit Suisse First Boston LLC (n/k/a Credit Suisse Securities (USA) LLC): Credit Suisse Group Credit Suisse Credit Suisse Holdings (USA), Inc. Credit Suisse (USA) Inc. The following entities are parent corporations or publicly held corporations that own 10% or more of the stock of respondent Pershing LLC: Pershing Group LLC The Bank of New York Company, Inc.

5 Respondents Barclays Bank PLC and Barclays Capital Inc. are wholly-owned subsidiaries of Barclays PLC, which has no parent corporations. No other publicly held company owns ii 10% or more of the stock of Barclays PLC, Barclays Bank PLC or Barclays Capital Inc. (iii) TABLE OF CONTENTS Page PARTIES TO THE i TABLE OF AUTHORITIES .. v BRIEF IN 1 COUNTERSTATEMENT OF THE 2 REASONS FOR DENYING THE petition .. 6 I. THIS PETITIONER PRESENTS THE SAME ISSUE AND ARGUMENTS PRESENTED BY THE PETITIONERS IN 6 II.

6 THIS CASE PRESENTS A POOR VEHICLE BECAUSE IT SEEKS REVIEW OF AN INTERLOCUTORY DECISION DENYING CLASS CERTIFICATION .. 12 III. THE FIFTH CIRCUIT CORRECTLY APPLIED CENTRAL 16 A. Petitioner s Theory Of Scheme Liability Would Nullify Central 16 1. Petitioner s Theory Of Liability Was Rejected In Central 17 2. Congress Ratified Central 20 B. This Court Has Consistently Defined Deceptive Conduct Under Section 10(b) To Require A Misrepresentation Or A Duty To Disclose.

7 22 1. The Statutory Text Of Section 10(b) Controls The Meaning Of Rule 10b-5 .. 22 2. This Court Has Held That In The Absence Of A Misrepresentation, Deceptive Con-duct Requires A Duty To Disclose .. 24 iv TABLE OF CONTENTS continued Page 3. Petitioner Miscites A Series Of This Court s Cases .. 27 C. Petitioner s Theory Of Scheme Liability Would Subject Countless Business Trans-actions To Unworkable 28 30 v TABLE OF AUTHORITIES CASES Page Affiliated Ute Citizens v.

8 United States , 406 128 (1972).. 4, 27 Basic Inc. v. Levinson, 485 224 (1988) .. 13 Brotherhood of Locomotive Firemen & Engine-men v. Bangor & Aroostook , 389 327 (1967).. 12 Central Bank of Denver, v. First Interstate Bank of Denver, , 511 164 (1994) ..passim In re Charter Communc ns, Inc. Sec. Litig., 443 987 (8th Cir. 2006), cert. granted sub nom. 127 S. Ct. 1873 (2007) (No. 06-43) .. 5 Chiarella v. United States , 445 222 (1980).. 23, 25, 27 Coopers & Lybrand v.

9 Livesay, 437 463 (1978).. 12 Dinsmore v. Squadron, Ellenoff, Plesent, Sheinfeld & Sorkin, 135 837 (2d Cir. 1998) .. 16 Dirks v. SEC, 681 824 ( Cir. 1982), rev d, 463 646 (1983) .. 26 Dirks v. SEC, 463 646 (1983) .. 25 Dura Pharms., Inc. v. Broudo, 544 336 (2005).. 13, 18 In re Enron Corp. Sec., Derivative & ERISA Litig., 439 F. Supp. 2d 692 ( Tex. 2006) .. 29 In re Enron Corp. Sec., Derivative & ERISA Litig., 2005 WL 1798423 ( Tex.)

10 July 26, 2005) .. 29 Ernst & Ernst v. Hochfelder, 425 185 (1976).. 22, 23 First Interstate Bank of Denver, v. Pring, 969 891 (10th Cir. 1992), rev d sub nom. 511 164 (1994).. 19 vi TABLE OF AUTHORITIES continued Page Glazer v. Enzo Biochem, Inc., 126 F. App x 593 (4th Cir. 2005), cert. denied, 127 S. Ct. 1876 (2007).. 16 In re Glen Fed., Inc. Sec. Litig., 60 591 (9th Cir. 1995) .. 16 Goldstein v. Cox, 396 471 (1970) .. 12 Green v. Santa Fe Indus.