White Collar Roundup - April 2019

SEC Gets SCOTUS Victory on Rule 10b-5 Scope

The U.S. Securities and Exchange Commission (SEC) got good news from the U.S. Supreme Court in Lorenzo v. SEC. The focus of the case was the scope of SEC Rule 10b-5, which broadly prohibits the dissemination of false or fraudulent information about securities offerings. In the case, Francis Lorenzo was the director of investment banking at a registered broker-dealer. Lorenzo was directed to and did send two emails that were written by his boss that sought investments and contained materially misleading statements. The SEC ultimately brought an administrative action against Lorenzo, who was found to have violated the securities laws. He appealed to the U.S. Court of Appeals for the District of Columbia and argued that he was not the "maker" of the statement and therefore couldn't be liable under Rule 10b-5(b), which prohibits persons from making untrue statements of material fact. Lorenzo based his argument on Janus Capital