Wed, Sep 18, 2019

Courts Create Uncertainty on Securities Cases

Ken Joseph, Managing Director and Head of Disputes Consulting 

A pair of cases taken to the U.S. Supreme Court could alter the legal landscape for Securities and Exchange Commission fraud litigation. In the balance is investors’ ability to recoup losses from corporate wrongdoing and the potential to spark further litigation.

One case in particular already has caused a stir among industry players. The court recently decided in Lorenzo v. SEC that a defendant could be held liable for taking part in a scheme to defraud investors, even though he was not the primary “maker” of the false statements to shareholders. 

The newest ruling departed from a trend of Supreme Court decisions that narrowed the scope of who could be held liable in fraud scheme cases. 

The case revolves around an investment banker, Francis V. Lorenzo, who was charged with fraud for disseminating information about the health of a startup’s finances. Lorenzo said he simply forwarded the deceptive emails with his signature along to shareholders, though he was not the primary author. 

This article was originally published on Bloomberg Law.  

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