Ford O'Brien, LLP

A Consequential SCOTUS Ruling For Investors

In recent months the Supreme Court of the United States (SCOTUS) has made major rulings with far-reaching consequences for individual and institutional investors. A highly anticipated future ruling could have a dramatic effect on securities fraud claims brought by investors and the Securities and Exchange Commission (SEC). 

In Janus Capital Group, Inc. v. First Derivative Traders, SCOTUS ruled that only the "maker" of a misstatement can be held liable under the Securities Exchange Act of 1934 and other pertinent SEC rules. 

On December 3, arguments will be heard in the case of Lorenzo v. SEC. The primary issue at stake in the case is whether the Janus ruling applies to "scheme liability" claims. In layman's terms, the question is whether someone other than the "maker" of an alleged false claim can be held accountable under SEC rules in a fraudulent-scheme claim (Source: "Lorenzo v. Securities and Exchange Commission", SCOTUSblog). 

Much like July's Lucia v. SEC ruling, the upcoming ruling on the Lorenzo case will directly affect any individual or entity who is accused of engaging in a fraudulent-scheme by the SEC. It will also mean the difference between being frowned upon or charged with a crime for those who are not the "maker" of a false claim. 

As always, if you are being investigated for fraud by the SEC, you need a firm on your side with a proven track record in this niche area of regulatory defense. These cases making it all the way to the Supreme Court demonstrate just how serious they are. 


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