Page:Francis V. Lorenzo v. Securities and Exchange Commission.pdf/21

Rh Janus, the court held that Lorenzo did not “make” the false statements at issue because he merely “transmitted statements devised by [his boss] at [his boss’] direction.” 872 F. 3d 578, 587 (CADC 2017). The SEC has not challenged that aspect of the decision below.

The panel majority nevertheless upheld the SEC’s decision holding Lorenzo primarily liable for the same false statements under other provisions of the securities laws—specifically, §10(b) of the Securities Exchange Act of 1934 (1934 Act), Rules 10b–5(a) and (c), and §17(a)(1) of the Securities Act of 1933 (1933 Act). Unlike Rule 10b–5(b), none of these provisions pertains specifically to fraudulent misstatements.

Even though Lorenzo undisputedly did not “make” the false statements at issue in this case under Rule 10b–5(b), the Court follows the SEC in holding him primarily liable for those statements under other provisions of the securities laws. As construed by the Court, each of these more general laws completely subsumes Rule 10b–5(b) and §17(a)(2) of the 1933 Act in cases involving fraudulent misstatements, even though these provisions specifically govern false statements. The majority’s interpretation of these provisions cannot be reconciled with their text or our precedents. Thus, I am once again compelled to “disagre[e] with the SEC’s broad view” of the securities laws. Janus, supra, at 145, n. 8.

I begin with the text. The Court of Appeals held that Lorenzo violated §10(b) of the 1934 Act and Rules 10b–5(a) and (c). In relevant part, §10(b) makes it unlawful for a person, in connection with the purchase or sale of a security, “[t]o use or employ… any manipulative or deceptive device or contrivance” in contravention of an SEC rule. 15