Lorenzo v. SEC (17-1077)
argument 17-1077Lorenzo v. SEC
Supreme Court of the United States
51 min
5 speakers
8 chapters
transcribed 4 days ago
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What is the Supreme Court’s opening statement on the Lorenzo v. SEC case?
Clear argument next in case seventeen ten seventy seven, Lorenzo versus the Securities and Exchange Commission.
Mr. Hine. Mr Chief Justice, may it please the court. In Janice Capitol, this court held that only the maker of a misstatement can be held liable for that misstatement under section ten B and Rule ten B five B. The court below correctly held that petitioner Frank Lorenzo was not the maker of the statements that are at issue in the two emails in this case. However, the court below erred when it held that Lorenzo could nevertheless be liable for those very same misstatements under a theory that by producing and sending those statements he engaged in a deceptive act, uh artifice to defraud or practice for purposes of liability under section ten B, Rule ten B five A and C and Section seventeen A one. For three reasons Lorenzo's actions do not support liability.
First, permitting liability under Rule ten B five A and C and seventeen A would allow plaintiffs to sidestep this court's holding in Janus and the limitations that were placed on misstatement liability. And it would allow plaintiffs to creatively relabel their inadequate misstatement claims as claims for deceptive devices and acts. The result is contrary to Janice and would run under rule ten B five B a nullity. Excuse me,
Janus was a private cause of action, correct?
Yes, Your Honor,
Under ten B five.
Yes, Your Honor. Under ten B five B.
I'm I understand what Janice said, but I don't know how it squares with seventeen A, and you swept seventeen A in. Uh ten B five uses the phrase to make any untrue statement. But seventeen A says to obtain money or property. by means of any um of any untrue statement of a material fact. Um That seems dramatically different to me. Seventeen A is a government provision, uh meaning only the government can sue under seventeen A. Why should we be treating the two identically? I don't know that anywhere in your brief you explain that. I know that we've had made general statements that the two inform each other. Б Сертні на дис. critical point because Janus was based explicitly on the making language of ten B five.
B. That is true, Your Honor. The the subsection that you quoted is actually from Section 17A, subsection two, which is not um was not charged by the SEC and which Mr. Lorenzo was not um accused of violating. And we agree that subsection two may be a better way for the SEC to proceed if they're going to try to hold petitioner liable as a primary violator because it it it almost fits very uh closely. here because that's the equivalent of Rule ten B five B.
But the same point can be made, Mr Haim, with respect to ten B five A and C and also with respect to seventeen A, one and three, right? But the idea is is Look look, Janice was a decision that uh it was a very textual decision. it's it interpreted the word make. It's it uh lots of uh examples from real life about who makes statements and who doesn't make statements. And neither A or C. in ten B five has the same language in it.
Well Justice Kagan, ten B five B only addresses misstatements. The other categories in ten B five A and ten B five C are really conduct based uh language. They get to acts and and practices and courses of business. And our view is that A and C cover quite a different type of So
you think that A and C are sort of any like everything except Misrepresentations or omissions. Is that your position? Uh w
th that's essentially our position. We don't dispute that there can be cases where where you have both misstatements and deceptive conduct. Um but as Desai said uh in the Circuit Court uh of appeals, is that the judiciary has always recognized the difference between deceptive conduct and deceptive statements.
So um uh take this case. Uh Mr. Lorenzo here sent false financial information to potential investors. He was when he did that, he was the head of the investment banking division and he sent this false financial information and You concede in your yellow brief you conceded quite a few times that he did so with an intent to defraud.
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Chapters
8 chapters
1
What is the Supreme Court’s opening statement on the Lorenzo v. SEC case?
0:00–6:10
2
How does the Court’s Janus decision affect liability under Rule 10‑b‑5 B?
6:10–12:14
3
Why do the parties argue that Lorenzo’s email‑sending conduct is not a deceptive act?
12:14–19:08
4
What is the significance of “actus reus” versus “mens rea” in this fraud analysis?
19:08–26:16
5
How do Sections 17‑A 1 and 17‑A 2 factor into the SEC’s claim against Lorenzo?
26:16–31:51
6
When does aiding‑and‑abetting liability apply under the securities statutes?
31:51–37:24
7
Why do the advocates claim that Rule 10‑b‑5 A and C should not be limited by the Janus ruling?
37:24–44:11
8
What are the parties’ final arguments on whether sending the emails makes Lorenzo a primary violator?
44:11–51:44