Supreme Court Upholds Liability Under Rule 10b-5(a) and (c) for an Individual Who Disseminated but Was Not the “Maker” of a Fraudulent Statement
On March 27, 2019, the Supreme Court in Lorenzo v. Securities and Exchange Commission, No. 17-1077, held that an individual who disseminates false or misleading statements with an intent to defraud can be found to have violated the “fraudulent scheme” provisions of Rule 10b-5(a) and (c) even if such an individual did not “make” the statements and is therefore outside the scope of subsection (b) of Rule 10b-5. A 6-2 justice majority affirmed the D.C. Circuit’s conclusion that petitioner is liable for knowingly conveying his boss’s false statements to potential investors. Justice Kavanaugh was recused from the case, as he dissented from the D.C. Circuit’s ruling.