Janus Capital Group, Inc. v. First Derivative Traders (09-525)
argument 09-525Janus Capital Group, Inc. v. First Derivative Traders
Supreme Court of the United States
1h 0m
7 speakers
8 chapters
transcribed 4 days ago
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What is the Supreme Court’s opening argument in Janus Capital v. First Derivative Traders?
We'll hear argument first this morning, case zero nine five two two two two two two two two two two five, Janus Capital Group versus First Derivative Traders. Mr. Perry?
Mr Chief Justice, and may it please the court. Affirming the judgment below would authorise private securities fraud class actions against every service provider that participates in the drafting of a public company's prospectus. It is therefore nothing less than a frontal assault on this court's decisions in Central Bank and Stoneridge. In those cases, Your Honors, this court held that service providers may not be sued. primarily in private class actions and left that matter for Congress to resolve. And Congress did respond. Not once, not twice, but three times to those decisions. First, in the PSLRA, the Congress authorized a federal action, a a government action only against aiders and abettors, leaving the question of private class actions
Who's the violator alleged here? Not in the complaint. But in the briefs. As I read the briefs Де claim that Um Janice itself. did not make the false statement. that um the two uh appellants did. that they are the actual speakers because they were talking about their activities and they use Janus as a conduit to uh deceive the market. That's I think what they're alleging.
Justice Sotomayor, the the challenge statements appear in the prospectuses for the Janus funds. Separate legal entities not parties to this law.
divulges misleading statements. We don't talk about The market analysts Falsity, we talk about the company's falsity because the market out analyst didn't have C enter.
Your Honor, the company uh excuse me, the conduit or analyst cases fall under two categories, neither of which is met here. First, they are a scheme between the company uh orchestrated by the company to distribute its information through the analyst to the market. And they are brought under 10B5A as scheme cases. That is most of the analyst cases. There is no 10 B five A claim in this case. This is only a 10B5B making claim. Second, those few cases, the analyst cases that are brought under B, involve an omission. That is, the company has failed to correct a statement made by an analyst. Where there is a duty to do so. There is no omission claim in this case because there is no duty.
But what's the difference between an omission or a commission? If a company purposely divulges a falsehood to an analyst, knowing it is going to be distributed and told. So who's making the false statement, the analyst or the company?
Your Honor, the company makes the statement to the market. Under basic, the analyst is the market. It is the ears of the market that takes So
why isn't why aren't the two appellants on their theory? I'm I'm We can talk about whether the complaint does or does not adequately allege their theory, that's a different issue. I accept that. But under their theory, why isn't the appellants, the primary violator, not even a secondary, because they They claim I think And I'm gonna find out from them. that Chanus had no C injured. that it didn't make the false statements, that all of this was done in secret. by the appellants, so they were the only violators.
Your Honor. The analyst cases, the issuer speaks to the market directly. Here there is an intervening legal entity, the Janus Funds. Scientist or no scientist, that is a separate question.
become Um a legal defense for someone who intentionally manipulates the market information.
Justice Sotomayor, the Congress has drafted two statutes that deal with puppets. Section twenty B Which these plaintiffs have not invoked makes it unlawful for one party to do indirectly what it would not be permitted to do directly. That's the puppet statute, the ventril ventriloquist dummy statute. That's the control person statute. No. There is also twenty A, which is the control person statute, also not invoked by these plaintiffs. Those are forms of secondary liability, Your Honor. In fact, the court's questions go to the distinction between primary and secondary liability.
If Janice had no CNC.
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Chapters
8 chapters
1
What is the Supreme Court’s opening argument in Janus Capital v. First Derivative Traders?
0:01–6:29
2
Who is alleged to be the violator – Janus Capital, its lawyers, or the fund trustees?
6:29–13:18
3
How do the parties describe the role of JCM’s in‑house and outside counsel in drafting the prospectus?
13:18–19:48
4
What do Sections 20A and 20B of the securities laws say about control‑person liability?
19:48–26:15
5
How is “attribution” of false statements determined for liability purposes?
26:15–34:29
6
When does an aide or abettor become a primary violator under the PSLRA?
34:29–43:05
7
What relief, if any, is available to fund investors and Janus shareholders?
43:05–52:06
8
What are the Court’s remaining questions and the parties’ final positions?
52:06–1:01:11