Janus Capital Group, Inc. v. First Derivative Traders (2010)
- Docket
- 09-525
- Decided
- 2010-01-01
Summary
Question: Did the Fourth Circuit err in concluding that a service provider – in this case JCM – can be held liable in a private securities fraud action for "helping or participating in" another company's misstatements? Did the Fourth Circuit err in concluding that a service provider – in this case JCM – can be held liable in a private securities fraud action for statements that were not directly and contemporaneously attributable to the service provider? Conclusion: Yes. The Supreme Court reversed the lower court order in an opinion by Justice Clarence Thomas. "Because the false statements included in the prospectuses were made by Janus Investment Fund, not by JCM, JCM and JCG cannot be held liable in a private action under Rule 10b–5," Justice Thomas wrote. Justice Stephen Breyer dissented, joined by Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan. "The majority has incorrectly interpreted the Rule's word 'make,'" Breyer argued. "Both language and case law indicate that, depending upon the circumstances, a management company, a board of trustees, individual company officers, or others, separately or together, might 'make' statements contained in a firm's prospectus—even if a board of directors has ultimate content-related responsibility."