The Supreme Court Limits Rule 10b-5 Liability to Person or Entity Making Alleged Misstatement
Yesterday, in Janus Capital Group, Inc. v. First Derivative Traders, No. 09-525, the Supreme Court issued a 5-4 decision limiting the scope of liability under Section 10(b) and Rule 10b-5 for “mak[ing] any untrue statement of material fact.” Rejecting the “creator” theory espoused by the Government, the Supreme Court held: “For purposes of Rule 10b-5, the maker of a statement is the person or entity with ultimate authority over the statement.” The Court’s holding offers a significant defense in a securities fraud suit for any number of other unattributed actors who may have had a role in preparing an allegedly false statement but did not actually “make” the statement.