May 22, 2019 Substantive Law

The Tangled Web of SEC Rule 10b-5: Lorenzo v. Securities and Exchange Commission

By Chauncey Lane, Cooper Overcash, and Michael Caine

Reprinted with permission from Business Law Today, April 2019. ©2019 by the American Bar Association. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

On March 27, 2019, the Supreme Court held (in a 6-2 decision) in Francis V. Lorenzo v. Securities and Exchange Commission1 that a person who (1) knowingly disseminates false and misleading statements to prospective investors and (2) acts with the intent to defraud can be held liable under subsections (a) and (c) of Securities and Exchange Commission Rule 10b-5 (Rule 10b-5), and other relevant statutory provisions, even if such person was not the “maker” of such statements.

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