With American class action lawsuits on the rise again after the subprime mortgage meltdown, Tuesday's US Supreme Court ruling shielding third parties from most investor lawsuits could not be more timely. The Stoneridge v Scientific-Atlanta decision was a homerun for corporate interests. The court reaffirmed a 1994 ruling that business partners, lawyers and bankers cannot be held liable for assisting or participating in corporate fraud unless investors can prove they specifically relied on those third parties when making investment decisions. Auditors who certify accounts are still on the hook but almost everyone else can now walk away when a company collapses. Merrill Lynch, for example, will be able to use this ruling to fend off the long-running Enron investor lawsuit, and UBS could do the same in its HealthSouth litigation.

While the ruling may help stem the tide of litigation, it comes with a sting. If gatekeepers, like lawyers and bankers, are protected they are less likely to question shady activities by their clients. In the late 1990s, the accounting firm Arthur Andersen was known to accept aggressive interpretations of auditing standards. It was later indicted for shredding Enron-related documents. The pre-credit crunch rise of "covenant-lite" loans that required less of corporate borrowers also stands testament to banks' willingness to drop standards to compete.