Supreme Court Clarifies What It Means To "Make" A Statement For Rule 10b-5 Liability

On June 13, 2011, the United States Supreme Court, in a 5-4 opinion delivered by Justice Thomas, held that an entity that does not have ultimate authority and control over the content of a statement or whether and how to communicate the statement does not "make" the statement for purposes of liability under Rule 10b-5. Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. ---, No. 09-525 (U.S. June 13, 2011). The Janus decision limits the scope of primary liability for violations of the antifraud provisions of the federal securities laws.

At issue in Janus was whether a mutual fund investment adviser and administrator can be held liable for participating in the dissemination of allegedly false statements contained in its client mutual funds' prospectuses. Plaintiff in the case was a shareholder of Janus Capital Group (JCG) who sued JCG and its wholly owned subsidiary Janus Capital Management (JCM), an investment adviser to the Janus family of mutual funds,