Page:Francis V. Lorenzo v. Securities and Exchange Commission.pdf/8

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At the outset, we review the relevant provisions of Rule 10b–5 and of the statutes. See Appendix, infra. As we have said, subsection (a) of the Rule makes it unlawful to “employ any device, scheme, or artifice to defraud.” Subsection (b) makes it unlawful to “make any untrue statement of a material fact.” And subsection (c) makes it unlawful to “engage in any act, practice, or course of business” that “operates… as a fraud or deceit.” See 17 CFR §240.10b–5.

There are also two statutes at issue. Section 10(b) makes it unlawful to “use or employ… any manipulative or deceptive device or contrivance” in contravention of Commission rules and regulations. 15 U. S. C. §78j(b). By its authority under that section, the Commission promulgated Rule 10b–5. The second statutory provision is §17(a), which, like Rule 10b–5, is organized into three subsections. 15 U. S. C. §77q(a). Here, however, we consider only the first subsection, §17(a)(1), for this is the only subsection that the Commission charged Lorenzo with violating. Like Rule 10b–5(a), (a)(1) makes it unlawful to “employ any device, scheme, or artifice to defraud.”

After examining the relevant language, precedent, and purpose, we conclude that (assuming other here-irrelevant legal requirements are met) dissemination of false or misleading statements with intent to defraud can fall within the scope of subsections (a) and (c) of Rule 10b–5, as well as the relevant statutory provisions. In our view, that is so even if the disseminator did not “make” the statements and consequently falls outside subsection (b) of the Rule.

It would seem obvious that the words in these provisions are, as ordinarily used, sufficiently broad to include within