Aaron v. SEC (1979)
- Docket
- 79-66
- Decided
- 1979-01-01
Summary
Question: Must the SEC prove that that the defendant intended to “deceive, manipulate, or defraud” in an action that alleges violations of Section 17(a) of the ’33 Act and Section 10(b) of the ’34 Act and Rule 10b-5? Conclusion: Yes. Justice Potter Stewart delivered the opinion of the 6-3 majority. The Court held that plain language and the legislative history of the statutes required the SEC to establish defendant’s intent to “deceive, manipulate, or defraud” for violations of Section 10(b) and the part of Section 17(a) that specifically refers to the use of a device, scheme, or artifice with intent to defraud. Employing the same textual and legislative history analysis, the Court further held that the parts Section 17(a) that deal with false statements, omissions of fact, and transactions or practices that operate as fraud do not contain an intent requirement. Chief Justice Warren E. Burger wrote a concurring opinion in which he urged those critical of the public policy implications to voice their complaints to Congress. He also argued that the Court of Appeals should have affirmed the ruling on the ground that Aaron “intentionally failed” to terminate the fraudulent statements about Lawn-A-Mat stock. Justice Harry A. Blackmun wrote an opinion concurring in part and dissenting in part in which he argued that the SEC should not be required to prove the defendants intent to establish a violation of Section 10(b), Rule 10b-5, or Section 17(a). Justice William J. Brennan, Jr. and Justice Thurgood Marshall joined in the opinion concurring in part and dissenting in part.