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ARTICLE · 16 JUNE 2011

Supreme Court Decision Alert - June 13, 2011

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SEC Rule 10b-5 prohibits "mak[ing] any untrue statement of a material fact" in connection with the purchase and sale of securities. 17 C.F.R. § 240.10b-5 (2010).

United StatesLitigation, Mediation & Arbitration
Andrew Tauber
Andrew Tauber
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Originally published June 13, 2011

Keywords: securities fraud, sale of securities, false statement,

Today the Supreme Court issued one decision, described below, of interest to the business community.

Securities Fraud—Rule 10b-5—Liability of Third Parties for Participation in Misleading Public Statements

Janus Capital Group Inc. v. First Derivative Traders, No. 09-525 (previously discussed in the June 28, 2010 Docket Report)

SEC Rule 10b-5 prohibits "mak[ing] any untrue statement of a material fact" in connection with the purchase and sale of securities. 17 C.F.R. § 240.10b-5 (2010). In a 5-4 decision, the Supreme Court held today in Janus Capital Group, Inc. v. First Derivative Traders, No. 09-525, that only an entity that has "ultimate authority" over an allegedly false statement can be held liable in a private action brought under Rule 10b-5. Slip op. 6. In so holding, the Court relied upon and reinforced its prior decisions in Central Bank of Denver,

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