December 09, 2015 Articles

The Duality of the U.S. Supreme Court's Janus Decision

Different courts have come to disparate conclusions with respect to its application

By Dayrel S. Sewell and Amulya Appalaraju

Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder prohibit, among other things, the making of untrue and misleading statements of fact in connection with the purchase and sale of a security.

In light of this prohibition, a seminal question arises with respect to who is the “maker” of the untrue or misleading statement? The United States Supreme Court addressed this question in its decision in Janus Capital Group, Inc. v. First Derivative Traders, 131 S. Ct. 2296 (2011). The Janus decision made an impact on the securities fraud landscape. It initially appeared to be a well-constructed guiding principle, yet different courts have come to disparate conclusions with respect to its application, thus creating the “duality” that exists—ironically—in the aftermath of the Janus decision.

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