1. Sender Primary Liability for Misstatements in PPMs and
Prospectuses: Lorenzo v. SEC (No. 17-1077 -- U.S. –
2019).
On March 27th, the Supreme Court issued a 1934 Act Rule 10b-5
opinion that will have implications for sponsors of private funds
and their placement agents. By way of reminder, in Janus
Capital Group Inc. v. First Derivative Traders, 546 U.S. 135
(2011), an investment adviser drafted a false statement in a mutual
fund prospectus was held not liable under Rule 10b-5(b) (which
prohibits making any untrue statement of material fact). The Court
held that the investment adviser did not make the false
statements.
In Lorenzo, the only conduct involved was a false
statement: an individual broker was found to have sent e-mails at
the direction of the broker's immediate boss that the broker
understood contained material untruths about an issuer. The Court
held that an individual who disseminates false statements
with intent to defraud is liable for those
