Supreme Court Rules in Favor of SEC in Fraud Case

SEC’s High Court Win Snaps Dry Spell on Enforcement Issues
– Law360

Manatt’s John Libby, leader of the firm’s investigations and white collar defense group, spoke to Law360 about a win for the U.S. Securities and Exchange Commission (SEC) in its “copy-paste” fraud case against former investment banker Francis Lorenzo.

The Supreme Court ruled in late March that a person who “knowingly solicits investors with a false statement ‘made’ by someone else can still be held primarily liable under Rule 10b-5’s subsections (a) and (c), which ban ‘employ[ing] any device, scheme or artifice to defraud’ and doing anything that ‘operates or would operate as a fraud or deceit upon any person.’”

Libby said the ruling expands the scope of the SEC’s enforcement abilities.

“The court has broadened the reach of the SEC’s basic antifraud rule to cover persons who distribute any statements they know to be false, whether or not they were involved in drafting or creating the statement,” Libby said.

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