U.S. Supreme Court Sides with SEC in Interpreting “Scheme Liability”

29 March 2019
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Key takeaways:
  • In Lorenzo v. SEC, decided on March 27, the U.S. Supreme Court ruled that dissemination of a false or misleading statement or omission with intent to defraud can be subject to liability under the so-called “scheme liability” provisions of the federal securities laws.
  • This decision could have broad-reaching effects, especially in the context of private securities claims; private plaintiffs will likely seek to use the Court’s decision to argue that any person who assists with the making of a fraudulent misstatement may be primarily liable – an outcome the Court’s 2011 decision in Janus Capital Group, Inc. v. First Derivative Traders foreclosed unless the person was the “maker” of the statement.