Securities, commodities, and exchanges

• Pages: 329-342

329

Securities, Commodities,

and Exchanges*

CHAPTER 9

PART I. JUDICIAL DEVELOPMENTS

A. The Supreme Court Holds That the Three Subsections of

SEC Rule 10b-5 Do Not Govern Mutually Exclusive Spheres

of Conduct

The United States Supreme Court in Lorenzo v. SEC1 clarified that an

individual who knowingly disseminates false statements with the intent to

defraud investors can be held liable for violating securities laws and regula-

tions even though the individual was not found to be the ultimate “maker” of

such statements. Thus, subsection (b) of Rule 10b-5—promulgated by the

Securities and Exchange Commission (SEC) under the Securities Exchange

Act of 1934, as amended (Exchange Act),2 imposing liability on the maker of

misleading statements—does not preclude liability under other subsections of

Rule 10b-5 and other securities laws for the same underlying type of conduct.

The holding confirms the SEC’s position that the subparts of Rule 10b-5 are

mutually supporting, not mutually exclusive.

* By James P. Gerkis, Proskauer Rose LLP, New York, N.Y. (Committee Co-

Chair); Frank G. Zarb, Jr., Proskauer Rose LLP, Washington, D.C. (Commit-

tee Vice Chair); Ariadne A. Panagopoulou, Lewis Brisbois, Bisgaard & Smith

LLP, New York, N.Y.; Ian P. Jong, Proskauer Rose LLP, New York, N.Y.; and

Louis E. Rambo, Proskauer Rose LLP, Washington, D.C.

1. 139 S. Ct. 1094, 1101 (2019).

2. 15 U.S.C. § 78j(b).