Lorenzo v. SEC , 203 L. Ed. 2d 484 ( 2019 )

(Slip Opinion) OCTOBER TERM, 2018 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
LORENZO v. SECURITIES AND EXCHANGE
COMMISSION
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE DISTRICT OF COLUMBIA CIRCUIT
No. 17–1077. Argued December 3, 2018—Decided March 27, 2019
Securities and Exchange Commission Rule 10b–5 makes it unlawful to
(a) “employ any device, scheme, or artifice to defraud,” (b) “make any
untrue statement of a material fact,” or (c) “engage in any act, prac-
tice, or course of business” that “operates . . . as a fraud or deceit” in
connection with the purchase or sale of securities. In Janus Capital
Group, Inc. v. First Derivative Traders, 564 U.S. 135, this Court held
that to be a “maker” of a statement under subsection (b) of that Rule,
one must have “ultimate authority over the statement, including its
content and whether and how to communicate it.” Id., at 142 (em-
phasis added). On the facts of Janus, this meant that an investment
adviser who had merely “participat[ed] in the drafting of a false
statement” “made” by another could not be held liable in a private ac-
tion under subsection (b). Id., at 145.
Petitioner Francis Lorenzo, while the director of investment bank-
ing at an SEC-registered brokerage firm, sent two e-mails to prospec-
tive investors. The content of those e-mails, which Lorenzo’s boss
supplied, described a potential investment in a company with “con-
firmed assets” of $10 million. In fact, Lorenzo knew that the compa-
ny had recently disclosed that its total assets were worth less than
$400,000.
In 2015, the Commission found that Lorenzo had violated Rule
10b–5, §10(b) of the Exchange Act, and §17(a)(1) of the Securities Act
by sending false and misleading statements to investors with intent
to defraud. On appeal, the District of Columbia Circuit held that Lo-
renzo could not be held liable as a “maker” under subsection (b) of the
Rule in light of Janus, but sustained the Commission’s finding with
respect to subsections (a) and (c) of the Rule, as well as §10(b) and
2 LORENZO v. SEC
Syllabus
§17(a)(1).
Held: Dissemination of false or misleading statements with intent to
defraud can fall within the scope of Rules 10b–5(a) and (c), as well as
the relevant statutory provisions, even if the disseminator did not
“make” the statements and consequently falls outside Rule 10b–5(b).
Pp. 5–13.
(a) It would seem obvious that the words in these provisions are,
as ordinarily used, sufficiently broad to include within their scope the
dissemination of false or misleading information with the intent to
defraud. By sending e-mails he understood to contain material un-
truths, Lorenzo “employ[ed]” a “device,” “scheme,” and “artifice to de-
fraud” within the meaning of subsection (a) of the Rule, §10(b), and
§17(a)(1). By the same conduct, he “engage[d] in a[n] act, practice, or
course of business” that “operate[d] . . . as a fraud or deceit” under
subsection (c) of the Rule. As Lorenzo does not challenge the appeals
court’s scienter finding, it is undisputed that he sent the e-mails with
“intent to deceive, manipulate, or defraud” the recipients. Aaron v.
SEC, 446 U.S. 680, 686, and n. 5. Resort to the expansive dictionary
definitions of “device,” “scheme,” and “artifice” in Rule 10b–5(a) and
§17(a)(1), and of “act” and “practice” in Rule 10b–5(c), only strength-
ens this conclusion. Under the circumstances, it is difficult to see
how Lorenzo’s actions could escape the reach of these provisions.
Pp. 5–7.
(b) Lorenzo counters that the only way to be liable for false state-
ments is through those provisions of the securities laws—like Rule
10b–5(b)—that refer specifically to false statements. Holding to the
contrary, he and the dissent say, would render subsection (b) “super-
fluous.” The premise of this argument is that each subsection gov-
erns different, mutually exclusive, spheres of conduct. But this Court
and the Commission have long recognized considerable overlap
among the subsections of the Rule and related provisions of the secu-
rities laws. And the idea that each subsection governs a separate
type of conduct is difficult to reconcile with the Rule’s language, since
at least some conduct that amounts to “employ[ing]” a “device,
scheme, or artifice to defraud” under subsection (a) also amounts to
“engag[ing] in a[n] act . . . which operates . . . as a fraud” under sub-
section (c). This Court’s conviction is strengthened by the fact that
the plainly fraudulent behavior confronted here might otherwise fall
outside the Rule’s scope. Using false representations to induce the
purchase of securities would seem a paradigmatic example of securi-
ties fraud. Pp. 7–9.
(c) Lorenzo and the dissent make a few other important arguments.
The dissent contends that applying Rules 10b–5(a) and (c) to conduct
like Lorenzo’s would render Janus “a dead letter.” Post, at 9. But
Cite as: 587 U. S. ____ (2019) 3
Syllabus
Janus concerned subsection (b), and it said nothing about the Rule’s
application to the dissemination of false or misleading information.
Thus, Janus would remain relevant (and preclude liability) where an
individual neither makes nor disseminates false information—
provided, of course, that the individual is not involved in some other
form of fraud. Lorenzo also claims that imposing primary liability
upon his conduct would erase or at least weaken the distinction be-
tween primary and secondary liability under the statute’s “aiding and
abetting” provision. See 15 U.S. C. §78t(e). But the line the Court
adopts today is clear: Those who disseminate false statements with
intent to defraud are primarily liable under Rules 10b–5(a) and (c),
§10(b), and §17(a)(1), even if they are secondarily liable under Rule
10b–5(b). As for Lorenzo’s suggestion that those like him ought to be
held secondarily liable, this offer will, too often, prove illusory.
Where a “maker” of a false statement does not violate subsection (b)
of the Rule (perhaps because he lacked the necessary intent), a dis-
seminator of those statements, even one knowingly engaged in an
egregious fraud, could not be held to have violated the “aiding and
abetting” statute. And if, as Lorenzo claims, the disseminator has
not primarily violated other parts of Rule 10b–5, then such a fraud,
whatever its intent or consequences, might escape liability altogeth-
er. That anomalous result is not what Congress intended. Pp. 9–13.
872 F.3d 578, affirmed.
BREYER, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and GINSBURG, ALITO, SOTOMAYOR, and KAGAN, JJ., joined. THOM-
AS, J., filed a dissenting opinion, in which GORSUCH, J., joined. KAV-
ANAUGH, J., took no part in the consideration or decision of the case.
Cite as: 587 U. S. ____ (2019) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 17–1077
_________________
FRANCIS V. LORENZO, PETITIONER v. SECURITIES
AND EXCHANGE COMMISSION
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
[March 27, 2019]
JUSTICE BREYER delivered the opinion of the Court.
Securities and Exchange Commission Rule 10b–5 makes
it unlawful:
“(a) To employ any device, scheme, or artifice to
defraud,
“(b) To make any untrue statement of a material
fact . . . , or
“(c) To engage in any act, practice, or course of busi-
ness which operates or would operate as a fraud or
deceit . . .
in connection with the purchase or sale of any security.”
17 CFR §240.10b–5 (2018).
In Janus Capital Group, Inc. v. First Derivative Traders,
564 U.S. 135 (2011), we examined the second of these
provisions, Rule 10b–5(b), which forbids the “mak[ing]” of
“any untrue statement of a material fact.” We held that
the “maker of a statement is the person or entity with
ultimate authority over the statement, including its con-
tent and whether and how to communicate it.” Id., at 142
(emphasis added). We said that “[w]ithout control, a
person or entity can merely suggest what to say, not
2 LORENZO v. SEC
Opinion of the Court
‘make’ a statement in its own right.” Ibid. And we illus-
trated our holding with an analogy: “[W]hen a speechwriter
drafts a speech, the content is entirely within the control
of the person who delivers it. And it is the speaker who
takes credit—or blame—for what is ultimately said.” Id.,
at 143. On the facts of Janus, this meant that an invest-
ment adviser who had merely “participat[ed] in the draft-
ing of a false statement” “made” by another could not be
held liable in a private action under subsection (b) of Rule
10b–5. Id., at 145.
In this case, we consider whether those who do not
“make” statements (as Janus defined “make”), but who
disseminate false or misleading statements to potential
investors with the intent to defraud, can be found to have
violated the other parts of Rule 10b–5, subsections (a) and
(c), as well as related provisions of the securities laws,
§10(b) of the Securities Exchange Act of 1934, 48 Stat.
891, as amended, 15 U.S. C. §78j(b), and §17(a)(1) of the
Securities Act of 1933, 48 Stat. 84–85, as amended, 15
U.S. C. §77q(a)(1). We believe that they can.
I
A
For our purposes, the relevant facts are not in dispute.
Francis Lorenzo, the petitioner, was the director of in-
vestment banking at Charles Vista, LLC, a registered
broker-dealer in Staten Island, New York. Lorenzo’s only
investment banking client at the time was Waste2Energy
Holdings, Inc., a company developing technology to con-
vert “solid waste” into “clean renewable energy.”
In a June 2009 public filing, Waste2Energy stated that
its total assets were worth about $14 million. This figure
included intangible assets, namely, intellectual property,
valued at more than $10 million. Lorenzo was skeptical of
this valuation, later testifying that the intangibles were a
“dead asset” because the technology “didn’t really work.”
Cite as: 587 U. S. ____ (2019) 3
Opinion of the Court
During the summer and early fall of 2009,
Waste2Energy hired Lorenzo’s firm, Charles Vista, to sell
to investors $15 million worth of debentures, a form of
“debt secured only by the debtor’s earning power, not by a
lien on any specific asset,” Black’s Law Dictionary 486
(10th ed. 2014).
In early October 2009, Waste2Energy publicly disclosed,
and Lorenzo was told, that its intellectual property was
worthless, that it had “ ‘ “[w]rit[ten] off . . . all [of its] in-
tangible assets,” ’ ” and that its total assets (as of March
31, 2009) amounted to $370,552.
Shortly thereafter, on October 14, 2009, Lorenzo sent
two e-mails to prospective investors describing the deben-
ture offering. According to later testimony by Lorenzo, he
sent the e-mails at the direction of his boss, who supplied
the content and “approved” the messages. The e-mails
described the investment in Waste2Energy as having “3
layers of protection,” including $10 million in “confirmed
assets.” The e-mails nowhere revealed the fact that
Waste2Energy had publicly stated that its assets were
in fact worth less than $400,000. Lorenzo signed the
e-mails with his own name, he identified himself as “Vice
President—Investment Banking,” and he invited the
recipients to “call with any questions.”
B
In 2013, the Securities and Exchange Commission
instituted proceedings against Lorenzo (along with his
boss and Charles Vista). The Commission charged that
Lorenzo had violated Rule 10b–5, §10(b) of the Exchange
Act, and §17(a)(1) of the Securities Act. Ultimately, the
Commission found that Lorenzo had run afoul of these
provisions by sending false and misleading statements to
investors with intent to defraud. As a sanction, it fined
Lorenzo $15,000, ordered him to cease and desist from
violating the securities laws, and barred him from working
4 LORENZO v. SEC
Opinion of the Court
in the securities industry for life.
Lorenzo appealed, arguing primarily that in sending the
e-mails he lacked the intent required to establish a viola-
tion of Rule 10b–5, §10(b), and §17(a)(1), which we have
characterized as “ ‘a mental state embracing intent to
deceive, manipulate, or defraud.’ ” Aaron v. SEC, 446
U.S. 680, 686, and n. 5 (1980). With one judge dissenting,
the Court of Appeals panel rejected Lorenzo’s lack-of-
intent argument. 872 F.3d 578, 583 (CADC 2017). Lo-
renzo does not challenge the panel’s scienter finding.
Reply Brief 17.
Lorenzo also argued that, in light of Janus, he could not
be held liable under subsection (b) of Rule 10b–5. 872
F.3d, at 586–587. The panel agreed. Because his boss
“asked Lorenzo to send the emails, supplied the central
content, and approved the messages for distribution,” id.,
at 588, it was the boss that had “ultimate authority” over
the content of the statement “and whether and how to
communicate it,” Janus, 563 U.S., at 142. (We took this
case on the assumption that Lorenzo was not a “maker”
under subsection (b) of Rule 10b–5, and do not revisit the
court’s decision on this point.)
The Court of Appeals nonetheless sustained (with one
judge dissenting) the Commission’s finding that, by know-
ingly disseminating false information to prospective inves-
tors, Lorenzo had violated other parts of Rule 10b–5,
subsections (a) and (c), as well as §10(b) and §17(a)(1).
Lorenzo then filed a petition for certiorari in this Court.
We granted review to resolve disagreement about whether
someone who is not a “maker” of a misstatement under
Janus can nevertheless be found to have violated the other
subsections of Rule 10b–5 and related provisions of the
securities laws, when the only conduct involved concerns a
misstatement. Compare e.g., 872 F.3d 578, with WPP
Luxembourg Gamma Three Sarl v. Spot Runner, Inc., 655
F.3d 1039, 1057–1058 (CA9 2011).
Cite as: 587 U. S. ____ (2019) 5
Opinion of the Court
II
A
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.” Sub-
section (b) makes it unlawful to “make any untrue state-
ment of a material fact.” And subsection (c) makes it
unlawful to “engage in any act, practice, or course of busi-
ness” 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 promul-
gated 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 con-
sider 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 unlaw-
ful to “employ any device, scheme, or artifice to defraud.”
B
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
6 LORENZO v. SEC
Opinion of the Court
their scope the dissemination of false or misleading infor-
mation with the intent to defraud. By sending emails he
understood to contain material untruths, Lorenzo “em-
ploy[ed]” a “device,” “scheme,” and “artifice to defraud”
within the meaning of subsection (a) of the Rule, §10(b),
and §17(a)(1). By the same conduct, he “engage[d] in a[n]
act, practice, or course of business” that “operate[d] . . . as
a fraud or deceit” under subsection (c) of the Rule. Recall
that Lorenzo does not challenge the appeals court’s scien-
ter finding, so we take for granted that he sent the emails
with “intent to deceive, manipulate, or defraud” the recipi-
ents. Aaron, 446 U.S., at 686, n. 5. Under the circum-
stances, it is difficult to see how his actions could escape
the reach of those provisions.
Resort to dictionary definitions only strengthens this
conclusion. A “ ‘device,’ ” we have observed, is simply
“ ‘[t]hat which is devised, or formed by design’ ”; a
“ ‘scheme’ ” is a “ ‘project,’ ” “ ‘plan[,] or program of some-
thing to be done’ ”; and an “ ‘artifice’ ” is “ ‘an artful strata-
gem or trick.’ ” Id., at 696, n. 13 (quoting Webster’s Inter-
national Dictionary 713, 2234, 157 (2d ed. 1934)
(Webster’s Second)). By these lights, dissemination of
false or misleading material is easily an “artful stratagem”
or a “plan,” “devised” to defraud an investor under subsec-
tion (a). See Rule 10b–5(a) (making it unlawful to “employ
any device, scheme, or artifice to defraud”); §17(a)(1)
(same). The words “act” and “practice” in subsection (c)
are similarly expansive. Webster’s Second 25 (defining
“act” as “a doing” or a “thing done”); id., at 1937 (defining
“practice” as an “action” or “deed”); see Rule 10b–5(c)
(making it unlawful to “engage in a[n] act, practice, or
course of business” that “operates . . . as a fraud or
deceit”).
These provisions capture a wide range of conduct.
Applying them may present difficult problems of scope in
borderline cases. Purpose, precedent, and circumstance
Cite as: 587 U. S. ____ (2019) 7
Opinion of the Court
could lead to narrowing their reach in other contexts. But
we see nothing borderline about this case, where the
relevant conduct (as found by the Commission) consists of
disseminating false or misleading information to prospec-
tive investors with the intent to defraud. And while one
can readily imagine other actors tangentially involved in
dissemination—say, a mailroom clerk—for whom liability
would typically be inappropriate, the petitioner in this
case sent false statements directly to investors, invited
them to follow up with questions, and did so in his capacity
as vice president of an investment banking company.
C
Lorenzo argues that, despite the natural meaning of
these provisions, they should not reach his conduct. This
is so, he says, because the only way to be liable for false
statements is through those provisions that refer specifi-
cally to false statements. Other provisions, he says, con-
cern “scheme liability claims” and are violated only when
conduct other than misstatements is involved. Brief for
Petitioner 4–6, 28–30. Thus, only those who “make” un-
true statements under subsection (b) can violate Rule 10b–
5 in connection with statements. (Similarly, §17(a)(2)
would be the sole route for finding liability for statements
under §17(a).) Holding to the contrary, he and the dissent
insist, would render subsection (b) of Rule 10b–5 “super-
fluous.” See post, at 6–7 (opinion of THOMAS, J.).
The premise of this argument is that each of these
provisions should be read as governing different, mutually
exclusive, spheres of conduct. But this Court and the
Commission have long recognized considerable overlap
among the subsections of the Rule and related provisions
of the securities laws. See Herman & MacLean v. Huddle-
ston, 459 U.S. 375, 383 (1983) (“[I]t is hardly a novel
proposition that” different portions of the securities laws
“prohibit some of the same conduct” (internal quotation
8 LORENZO v. SEC
Opinion of the Court
marks omitted)). As we have explained, these laws
marked the “first experiment in federal regulation of the
securities industry.” SEC v. Capital Gains Research
Bureau, Inc., 375 U.S. 180, 198 (1963). It is “understand-
able, therefore,” that “in declaring certain practices unlaw-
ful,” it was thought prudent “to include both a general
proscription against fraudulent and deceptive practices
and, out of an abundance of caution, a specific proscription
against nondisclosure” even though “a specific proscription
against nondisclosure” might in other circumstances be
deemed “surplusage.” Id., at 198–199. “Each succeeding
prohibition” was thus “meant to cover additional kinds of
illegalities—not to narrow the reach of the prior sections.”
United States v. Naftalin, 441 U.S. 768, 774 (1979). We
have found “ ‘no warrant for narrowing alternative provi-
sions . . . adopted with the purpose of affording added
safeguards.’ ” Ibid. (quoting United States v. Gilliland,
312 U.S. 86, 93 (1941)); see Affiliated Ute Citizens of Utah
v. United States, 406 U.S. 128, 152–153 (1972) (While “the
second subparagraph of [Rule 10b–5] specifies the making
of an untrue statement . . . [t]he first and third subpara-
graphs are not so restricted”). And since its earliest days,
the Commission has not viewed these provisions as mutu-
ally exclusive. See, e.g., In re R. D. Bayly & Co., 19 S.E. C.
773 (1945) (finding violations of what would become Rules
10b–5(b) and (c) based on the same misrepresentations
and omissions); In re Arthur Hays & Co., 5 S.E. C. 271
(1939) (finding violations of both §§17(a)(2) and (a)(3)
based on false representations in stock sales).
The idea that each subsection of Rule 10b–5 governs a
separate type of conduct is also difficult to reconcile with
the language of subsections (a) and (c). It should go with-
out saying that at least some conduct amounts to “em-
ploy[ing]” a “device, scheme, or artifice to defraud” under
subsection (a) as well as “engag[ing] in a[n] act . . . which
operates . . . as a fraud” under subsection (c). In Affiliated
Cite as: 587 U. S. ____ (2019) 9
Opinion of the Court
Ute, for instance, we described the “defendants’ activities”
as falling “within the very language of one or the other of
those subparagraphs, a ‘course of business’ or a ‘device,
scheme, or artifice’ that operated as a fraud.” 406 U.S., at
153. (The dissent, for its part, offers no account of how the
superfluity problems that motivate its interpretation can
be avoided where subsections (a) and (c) are concerned.)
Coupled with the Rule’s expansive language, which
readily embraces the conduct before us, this considerable
overlap suggests we should not hesitate to hold that Lo-
renzo’s conduct ran afoul of subsections (a) and (c), as well
as the related statutory provisions. Our conviction is
strengthened by the fact that we here confront behavior
that, though plainly fraudulent, might otherwise fall
outside the scope of the Rule. Lorenzo’s view that subsec-
tion (b), the making-false-statements provision, exclusively
regulates conduct involving false or misleading statements
would mean those who disseminate false statements with
the intent to cheat investors might escape liability under
the Rule altogether. But using false representations to
induce the purchase of securities would seem a paradig-
matic example of securities fraud. We do not know why
Congress or the Commission would have wanted to disarm
enforcement in this way. And we cannot easily reconcile
Lorenzo’s approach with the basic purpose behind these
laws: “to substitute a philosophy of full disclosure for the
philosophy of caveat emptor and thus to achieve a high
standard of business ethics in the securities industry.”
Capital Gains, 375 U.S., at 186. See also, e.g., SEC v. W. J.
Howey Co., 328 U.S. 293, 299 (1946) (the securities laws
were designed “to meet the countless and variable
schemes devised by those who seek the use of the money of
others on the promise of profits”).
III
Lorenzo and the dissent make a few other important
10 LORENZO v. SEC
Opinion of the Court
arguments. They contend that applying subsections (a) or
(c) of Rule 10b–5 to conduct like his would render our
decision in Janus (which we described at the outset, su-
pra, at 1–2) “a dead letter,” post, at 9. But we do not see
how that is so. In Janus, we considered the language in
subsection (b), which prohibits the “mak[ing]” of “any
untrue statement of a material fact.” See 564 U.S., at
141–143. We held that the “maker” of a “statement” is the
“person or entity with ultimate authority over the state-
ment.” Id., at 142. And we found that subsection (b) did
not (under the circumstances) cover an investment adviser
who helped draft misstatements issued by a different
entity that controlled the statements’ content. Id., at 146–
148. We said nothing about the Rule’s application to the
dissemination of false or misleading information. And we
can assume that Janus would remain relevant (and pre-
clude liability) where an individual neither makes nor
disseminates false information—provided, of course, that
the individual is not involved in some other form of fraud.
Next, Lorenzo points to the statute’s “aiding and abet-
ting” provision. 15 U.S. C. §78t(e). This provision, en-
forceable only by the Commission (and not by private
parties), makes it unlawful to “knowingly or recklessly . . .
provid[e] substantial assistance to another person” who
violates the Rule. Ibid.; see Janus, 564 U.S., at 143 (cit-
ing Central Bank of Denver, N. A. v. First Interstate Bank
of Denver, N. A., 511 U.S. 164 (1994)). Lorenzo claims
that imposing primary liability upon his conduct would
erase or at least weaken what is otherwise a clear distinc-
tion between primary and secondary (i.e., aiding and
abetting) liability. He emphasizes that, under today’s
holding, a disseminator might be a primary offender with
respect to subsection (a) of Rule 10b–5 (by employing a
“scheme” to “defraud”) and also secondarily liable as an
aider and abettor with respect to subsection (b) (by provid-
ing substantial assistance to one who “makes” a false
Cite as: 587 U. S. ____ (2019) 11
Opinion of the Court
statement). And he refers to two cases that, in his view,
argue in favor of circumscribing primary liability. See
Central Bank, 511 U.S., at 164; Stoneridge Investment
Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148
(2008).
We do not believe, however, that our decision creates a
serious anomaly or otherwise weakens the distinction
between primary and secondary liability. For one thing, it
is hardly unusual for the same conduct to be a primary
violation with respect to one offense and aiding and abet-
ting with respect to another. John, for example, might sell
Bill an unregistered firearm in order to help Bill rob a
bank, under circumstances that make him primarily li-
able for the gun sale and secondarily liable for the bank
robbery.
For another, the cases to which Lorenzo refers do not
help his cause. Take Central Bank, where we held that
Rule 10b–5’s private right of action does not permit suits
against secondary violators. 511 U.S., at 177. The hold-
ing of Central Bank, we have said, suggests the need for a
“clean line” between conduct that constitutes a primary
violation of Rule 10b–5 and conduct that amounts to a
secondary violation. Janus, 564 U.S., at 143, and n. 6.
Thus, in Janus, we sought an interpretation of “make”
that could neatly divide primary violators and actors too
far removed from the ultimate decision to communicate a
statement. Ibid. (citing Central Bank, 511 U.S. 164). The
line we adopt today is just as administrable: Those who
disseminate false statements with intent to defraud are
primarily liable under Rules 10b–5(a) and (c), §10(b), and
§17(a)(1), even if they are secondarily liable under Rule
10b–5(b). Lorenzo suggests that classifying dissemination
as a primary violation would inappropriately subject
peripheral players in fraud (including him, naturally) to
substantial liability. We suspect the investors who re-
ceived Lorenzo’s e-mails would not view the deception so
12 LORENZO v. SEC
Opinion of the Court
favorably. And as Central Bank itself made clear, even a
bit participant in the securities markets “may be liable as
a primary violator under [Rule] 10b–5” so long as “all of
the requirements for primary liability . . . are met.” Id.,
at 191.
Lorenzo’s reliance on Stoneridge is even further afield.
There, we held that private plaintiffs could not bring suit
against certain securities defendants based on undisclosed
deceptions upon which the plaintiffs could not have
relied. 552 U.S., at 159. But the Commission, unlike
private parties, need not show reliance in its enforcement
actions. And even supposing reliance were relevant here,
Lorenzo’s conduct involved the direct transmission of false
statements to prospective investors intended to induce
reliance—far from the kind of concealed fraud at issue in
Stoneridge.
As for Lorenzo’s suggestion that those like him ought to
be held secondarily liable, this offer will, far too often,
prove illusory. In instances where a “maker” of a false
statement does not violate subsection (b) of the Rule (per-
haps because he lacked the necessary intent), a dissemina-
tor of those statements, even one knowingly engaged in an
egregious fraud, could not be held to have violated the
“aiding and abetting” statute. That is because the statute
insists that there be a primary violator to whom the sec-
ondary violator provided “substantial assistance.” 15
U.S. C. §78t(e). And the latter can be “deemed to be in
violation” of the provision only “to the same extent as the
person to whom such assistance is provided.” Ibid. In
other words, if Acme Corp. could not be held liable under
subsection (b) for a statement it made, then a knowing
disseminator of those statements could not be held liable
for aiding and abetting Acme under subsection (b). And if,
as Lorenzo claims, the disseminator has not primarily
violated other parts of Rule 10b–5, then such a fraud,
whatever its intent or consequences, might escape liability
Cite as: 587 U. S. ____ (2019) 13
Opinion of the Court
altogether.
That is not what Congress intended. Rather, Congress
intended to root out all manner of fraud in the securities
industry. And it gave to the Commission the tools to
accomplish that job.
* * *
For these reasons, the judgment of the Court of Appeals
is affirmed.
So ordered.
JUSTICE KAVANAUGH took no part in the consideration
or decision of this case.
14 LORENZO v. SEC
Opinion
Appendix of the of
to opinion Court
the Court
APPENDIX
17 CFR §240.10b–5
“It shall be unlawful for any person, directly or indirectly,
by the use of any means or instrumentality of interstate
commerce, or of the mails or of any facility of any national
securities exchange,
“(a) To employ any device, scheme, or artifice to
defraud,
“(b) To make any untrue statement of a material
fact or to omit to state a material fact necessary in or-
der to make the statements made, in the light of the
circumstances under which they were made, not mis-
leading, or
“(c) To engage in any act, practice, or course of busi-
ness which operates or would operate as a fraud or
deceit upon any person
in connection with the purchase or sale of any security.”
15 U.S. C. §78j
“It shall be unlawful for any person, directly or in-
directly, by the use of any means or instrumentality of in-
terstate commerce or of the mails, or of any facility of any
national securities exchange—
* * *
“(b) To use or employ, in connection with the purchase
or sale of any security registered on a national securities ex-
change or any security not so registered, or any securities-
based swap agreement[,] any manipulative or decep-
tive device or contrivance in contravention of such rules
and regulations as the Commission may prescribe as
Cite as: 587 U. S. ____ (2019) 15
Opinion
Appendix of the of
to opinion Court
the Court
necessary or appropriate in the public interest or for the
protection of investors.”
15 U.S. C. §77q
“(a) Use of interstate commerce for purpose of fraud or
deceit
“It shall be unlawful for any person in the offer or sale of
any securities (including security-based swaps) or any
security-based swap agreement . . . by the use of any
means or instruments of transportation or communication
in interstate commerce or by use of the mails, directly or
indirectly—
“(1) to employ any device, scheme, or artifice to de-
fraud, or
“(2) to obtain money or property by means of any
untrue statement of a material fact or any omission to
state a material fact necessary in order to make the
statements made, in light of the circumstances under
which they were made, not misleading; or
“(3) to engage in any transaction, practice, or course
of business which operates or would operate as a
fraud or deceit upon the purchaser.”
15 U.S. C. §78t
“(e) Prosecution of persons who aid and abet violations
“For purposes of any action brought by the Commission
. . . , any person that knowingly or recklessly provides
substantial assistance to another person in violation of a
provision of this chapter, or of any rule or regulation
issued under this chapter, shall be deemed in violation of
such provision to the same extent as the person to whom
such assistance is provided.
Cite as: 587 U. S. ____ (2019) 1
THOMAS, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 17–1077
_________________
FRANCIS V. LORENZO, PETITIONER v. SECURITIES
AND EXCHANGE COMMISSION
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
[March 27, 2019]
JUSTICE THOMAS, with whom JUSTICE GORSUCH joins,
dissenting.
In Janus Capital Group, Inc. v. First Derivative Traders,
564 U.S. 135 (2011), we drew a clear line between primary
and secondary liability in fraudulent-misstatement cases:
A person does not “make” a fraudulent misstatement
within the meaning of Securities and Exchange Commis-
sion (SEC) Rule 10b–5(b)—and thus is not primarily liable
for the statement—if the person lacks “ultimate authority
over the statement.” Id., at 142. Such a person could,
however, be liable as an aider and abettor under principles
of secondary liability.
Today, the Court eviscerates this distinction by holding
that a person who has not “made” a fraudulent misstate-
ment can nevertheless be primarily liable for it. Because
the majority misconstrues the securities laws and flouts
our precedent in a way that is likely to have far-reaching
consequences, I respectfully dissent.
I
To appreciate the sweeping nature of the Court’s hold-
ing, it is helpful to begin with the facts of this case. On
October 14, 2009, the owner of the firm at which petitioner
Frank Lorenzo worked instructed him to send e-mails to
two clients regarding a debenture offering. The owner
2 LORENZO v. SEC
THOMAS, J., dissenting
explained that he wanted the e-mails to come from the
firm’s investment-banking division, which Lorenzo di-
rected. Lorenzo promptly addressed an e-mail to each
client, “cut and pasted” the contents of each e-mail—which
he received from the owner—into the body, and “sent
[them] out.” App. 321. It is undisputed that Lorenzo did
not draft the e-mails’ contents, though he knew that they
contained false or misleading statements regarding the
debenture offering. Both e-mails stated that they were
sent “[a]t the request of ” the owner of the firm. Id., at
403, 405. No other allegedly fraudulent conduct is at
issue.
In 2013, the SEC brought enforcement proceedings
against the owner of the firm, the firm itself, and Lorenzo.
Even though Lorenzo sent the e-mails at the owner’s
request, the SEC did not charge Lorenzo with aiding and
abetting fraud committed by the owner. See 15 U.S. C.
§§ 77o(b), 78o(b)(4)(E), 78t(e). Instead, the SEC charged
Lorenzo as a primary violator of multiple securities laws,1
including Rule 10b–5(b), which prohibits “mak[ing] any
untrue statement of a material fact . . . in connection with
the purchase or sale of any security.” 17 CFR §240.10b–
5(b) (2018); see Ernst & Ernst v. Hochfelder, 425 U.S. 185,
212–214 (1976) (construing Rule 10b–5(b) to require scien-
ter). The SEC ultimately concluded that, by “knowingly
sen[ding] materially misleading language from his own
email account to prospective investors,” App. to Pet. for
Cert. 77, Lorenzo violated Rule 10b–5(b) and several other
antifraud provisions of the securities laws. The SEC
“barred [him] from serving in the securities industry” for
life. Id., at 91.
The Court of Appeals unanimously rejected the SEC’s
determination that Lorenzo violated Rule 10b–5(b). Ap-
——————
1 For ease of reference, I use “securities laws” to refer to both statutes
and SEC regulations.
Cite as: 587 U. S. ____ (2019) 3
THOMAS, J., dissenting
plying Janus, the court held that Lorenzo did not “make”
the false statements at issue because he merely “transmit-
ted statements devised by [his boss] at [his boss’] direc-
tion.” 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 deci-
sion 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.
II
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 securi-
ties 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 “disa-
gre[e] with the SEC’s broad view” of the securities laws.
Janus, supra, at 145, n. 8.
A
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
4 LORENZO v. SEC
THOMAS, J., dissenting
U. S. C. §78j(b). Rule 10b–5 was promulgated under this
statutory authority. That Rule makes it unlawful, in
connection with the purchase or sale of any security,
“(a) To employ any device, scheme, or artifice to
defraud,
“(b) To make any untrue statement of a material
fact . . . , or
“(c) To engage in any act, practice, or course of busi-
ness which operates or would operate as a fraud or
deceit . . . .” 17 CFR §240.10b–5.
The Court of Appeals also held that Lorenzo violated
§17(a)(1) of the 1933 Act. Similar to Rule 10b–5, §17(a) of
the Act provides that it is unlawful, in connection with the
offer or sale of a security,
“(1) to employ any device, scheme, or artifice to de-
fraud, or
“(2) to obtain money or property by means of any
untrue statement of a material fact . . . ; or
“(3) to engage in any transaction, practice, or course
of business which operates or would operate as a
fraud or deceit upon the purchaser.” 15 U.S. C.
§77q(a)(1).
We can quickly dispose of Rule 10b–5(a) and §17(a)(1).
The act of knowingly disseminating a false statement at
the behest of its maker, without more, does not amount to
“employ[ing] any device, scheme, or artifice to defraud”
within the meaning of those provisions. As the contempo-
raneous dictionary definitions cited by the majority make
clear, each of these words requires some form of planning,
designing, devising, or strategizing. See ante, at 6. We
have previously observed that “the terms ‘device,’ ‘scheme,’
and ‘artifice’ all connote knowing or intentional practices.”
Aaron v. SEC, 446 U.S. 680, 696 (1980) (emphasis added).
In other words, they encompass “fraudulent scheme[s],”
Cite as: 587 U. S. ____ (2019) 5
THOMAS, J., dissenting
such as a “ ‘short selling’ scheme,” a wash sale, a matched
order, price rigging, or similar conduct. United States v.
Naftalin, 441 U.S. 768, 770, 778 (1979) (applying
§17(a)(1)); see Santa Fe Industries, Inc. v. Green, 430 U.S.
462, 473 (1977) (interpreting the term “manipulative” in
§10(b)).
Here, it is undisputed that Lorenzo did not engage in
any conduct involving planning, scheming, designing, or
strategizing, as Rule 10b–5(a) and §17(a)(1) require for a
primary violation. He sent two e-mails drafted by a supe-
rior, to recipients specified by the superior, pursuant to
instructions given by the superior, without collaborating
on the substance of the e-mails or otherwise playing an
independent role in perpetrating a fraud. That Lorenzo
knew the messages contained falsities does not change the
essentially administrative nature of his conduct here; he
might have assisted in a scheme, but he did not himself
plan, scheme, design, or strategize. In my view, the plain
text of Rule 10b–5(a) and §17(a)(1) thus does not encom-
pass Lorenzo’s conduct as a matter of primary liability.
The remaining provision, Rule 10b–5(c), seems broader
at first blush. But the scope of this conduct-based
provision—and, for that matter, Rule 10b–5(a) and
§17(a)(1)—must be understood in light of its codification
alongside a prohibition specifically addressing primary
liability for false statements. Rule 10b–5(b) imposes
primary liability on the “make[r]” of a fraudulent mis-
statement. 17 CFR §240.10b–5(b); see Janus, 564 U.S., at
141–142. And §17(a)(2) imposes primary liability on a
person who “obtain[s] money or property by means of ” a
false statement. 15 U.S. C. §77q(a)(2). The conduct-
based provisions of Rules 10b–5(a) and (c) and §17(a)(1)
must be interpreted in view of the specificity of these
false-statement provisions, and therefore cannot be con-
strued to encompass primary liability solely for false
statements. This view is consistent with our previous
6 LORENZO v. SEC
THOMAS, J., dissenting
recognition that “each subparagraph of §17(a) ‘proscribes a
distinct category of misconduct’ ” and “ ‘is meant to cover
additional kinds of illegalities.’ ” Aaron, supra, at 697
(quoting Naftalin, supra, at 774; emphasis added).
The majority disregards these express limitations.
Under the Court’s rule, a person who has not “made” a
fraudulent misstatement within the meaning of Rule 10b–
5(b) nevertheless could be held primarily liable for facili-
tating that same statement; the SEC or plaintiff need only
relabel the person’s involvement as an “act,” “device,”
“scheme,” or “artifice” that violates Rule 10b–5(a) or (c).
And a person could be held liable for a fraudulent mis-
statement under §17(a)(1) even if the person did not ob-
tain money or property by means of the statement. In
short, Rule 10b–5(b) and §17(a)(2) are rendered entirely
superfluous in fraud cases under the majority’s reading.2
This approach is in tension with “ ‘the cardinal rule that,
if possible, effect shall be given to every clause and part of
a statute.’ ” RadLAX Gateway Hotel, LLC v. Amalgamated
Bank, 566 U.S. 639, 645 (2012) (quoting D. Ginsberg &
Sons, Inc. v. Popkin, 285 U.S. 204, 208 (1932)). I would
therefore apply the “old and familiar rule ” that “the specific
governs the general.” RadLAX, supra, at 645–646 (inter-
nal quotation marks omitted); see A. Scalia & B. Garner,
Reading Law 51 (2012) (canon equally applicable to stat-
utes and regulations). This canon of construction applies
not only to resolve “contradiction[s]” between general and
specific provisions, but also to avoid “the superfluity of a
specific provision that is swallowed by the general one.”
RadLAX, 566 U.S., at 645. Here, liability for false state-
——————
2 I recognize that §17(a)(1) could be deemed narrower than §17(a)(2)
in the sense that it requires scienter, whereas §17(a)(2) does not.
Aaron v. SEC, 446 U.S. 680, 697 (1980). But scienter is not disputed in
this case, and the specific terms of §17(a)(2) are otherwise completely
subsumed within the more general terms of §17(a)(1), as interpreted by
the majority.
Cite as: 587 U. S. ____ (2019) 7
THOMAS, J., dissenting
ments is “ ‘specifically dealt with’ ” in Rule 10b–5(b) and
§17(a)(2). Id., at 646 (quoting D. Ginsberg & Sons, supra,
at 208). But Rule 10b–5 and §17(a) also contain general
prohibitions that, “ ‘in [their] most comprehensive sense,
would include what is embraced in’ ” the more specific
provisions. 566 U.S., at 646. I would hold that the provi-
sions specifically addressing false statements “ ‘must be
operative’ ” as to false-statement cases, and that the more
general provisions should be read to apply “ ‘only [to] such
cases within [their] general language as are not within
the’ ” purview of the specific provisions on false state-
ments. Ibid.
Adopting this approach to the statutory text would align
with our previous admonitions that the securities laws
should not be “[v]iewed in isolation” and stretched to their
limits. Hochfelder, 425 U.S., at 212. In Hochfelder, for
example, we concluded that the key words of §10(b) em-
ployed the “terminology of intentional wrongdoing” and
thus “strongly suggest[ed]” that it “proscribe[s] knowing or
intentional misconduct,” even though the statute did not
expressly state as much. Id., at 197, 214. We took a
similar approach to §17(a)(1) of the 1933 Act. Aaron, 446
U.S., at 695–697. We have also limited the terms of Rule
10b–5 by recognizing that it was adopted pursuant to
§10(b) and thus “encompasses only conduct already pro-
hibited by §10(b).” Stoneridge Investment Partners, LLC v.
Scientific-Atlanta, Inc., 552 U.S. 148, 157 (2008); see
Hochfelder, supra, at 212–214.
Contrary to the suggestion of the majority, this ap-
proach does not necessarily require treating each provi-
sion of Rule 10b–5 or §17(a) as “governing different, mu-
tually exclusive, spheres of conduct.” Ante, at 7. Nor does
it prevent the securities laws from mutually reinforcing
one another or overlapping to some extent. Ante, at 7–8.
It simply contemplates giving full effect to the specific
prohibitions on false statements in Rule 10b–5(b) and
8 LORENZO v. SEC
THOMAS, J., dissenting
§17(a)(2) instead of rendering them superfluous.
The majority worries that this approach would allow
people who disseminate false statements with the intent
to defraud to escape liability under Rule 10b–5. Ante, at 9.
That is not so. If a person’s only role is transmitting
fraudulent misstatements at the behest of the statements’
maker, the person’s conduct would be appropriately as-
sessed as a matter of secondary liability pursuant to pro-
visions like 15 U.S. C. §§77o(b), 78t(e), and 78o(b)(4)(E).
And if a person engages in other acts prohibited by the
Rule, such as developing and employing a fraudulent
scheme, the person would be primarily liable for that
conduct.
The majority suggests that secondary liability may often
prove illusory. It hypothesizes, for example, a situation in
which the “maker” of a false statement does not know that
it was false and thus does not violate Rule 10b–5(b), but
the disseminator knows that the statement is false. Un-
der that scenario, the majority fears that the person dis-
seminating the statements could be “engaged in an egre-
gious fraud,” yet would not be liable as an aider and
abettor for lack of a primary violator. Ante, at 12. This
concern is misplaced. As an initial matter, I note that
§17(a)(2) does not require scienter, so the maker of the
statement may still be liable under that provision. Aaron,
supra, at 695–697. Moreover, an ongoing, “egregious”
fraud is likely to independently constitute a primary
violation of the conduct-based securities laws, wholly
apart from the laws prohibiting fraudulent misstatements.
Here, by contrast, we are concerned with the dissemina-
tion of two misstatements at the request of their maker.
This type of conduct is appropriately assessed under prin-
ciples of secondary liability.
B
The majority’s approach contradicts our precedent in
Cite as: 587 U. S. ____ (2019) 9
THOMAS, J., dissenting
two distinct ways.
First, the majority’s opinion renders Janus a dead let-
ter. In Janus, we held that liability under Rule 10b–5(b)
was limited to the “make[r]” of the statement and that
“[o]ne who prepares or publishes a statement on behalf of
another is not its maker” within the meaning of Rule 10b–
5(b). 564 U.S., at 142 (emphasis added). It is undisputed
here that Lorenzo was not the maker of the fraudulent
misstatements. The majority nevertheless finds primary
liability under different provisions of Rule 10b–5, without
any real effort to reconcile its decision with Janus. Al-
though it “assume[s] that Janus would remain relevant
(and preclude liability) where an individual neither makes
nor disseminates false information,” in the next breath the
majority states that this would be true only if “the indi-
vidual is not involved in some other form of fraud.” Ante,
at 10. Given that, under the majority’s rule, administra-
tive acts undertaken in connection with a fraudulent
misstatement qualify as “other form[s] of fraud,” the ma-
jority’s supposed preservation of Janus is illusory.
Second, the majority fails to maintain a clear line
between primary and secondary liability in fraudulent-
misstatement cases. Maintaining this distinction is im-
portant because, as the majority notes, there is no private
right of action against mere aiders and abettors. Ante, at
10; see Central Bank of Denver, N. A. v. First Interstate
Bank of Denver, N. A., 511 U.S. 164, 191 (1994). Here,
however, the majority does precisely what we declined to
do in Janus: impose broad liability for fraudulent mis-
statements in a way that makes the category of aiders and
abettors in these cases “almost nonexistent.” 564 U.S., at
143. If Lorenzo’s conduct here qualifies for primary liabil-
ity under §10(b) and Rule 10b–5(a) or (c), then virtually
any person who assists with the making of a fraudulent
misstatement will be primarily liable and thereby subject
not only to SEC enforcement, but private lawsuits.
10 LORENZO v. SEC
THOMAS, J., dissenting
The Court correctly notes that it is not uncommon for
the same conduct to be a primary violation with respect
to one offense and aiding and abetting with respect to
another—as, for example, when someone illegally sells a
gun to help another person rob a bank. Ante, at 11. But
this case does not involve two distinct crimes. The majority
has interpreted certain provisions of an offense so broadly
as to render superfluous the more stringent, on-point
requirements of a narrower provision of the same offense.
Criminal laws regularly and permissibly overlap with each
other in a way that allows the same conduct to constitute
different crimes with different punishments. That differs
significantly from interpreting provisions in a law to com-
pletely eliminate specific limitations in a neighboring
provision of that very same law. The majority’s
overreading of Rules 10b–5(a) and (c) and §17(a)(1) is
especially problematic because the heartland of these
provisions is conduct-based fraud—“employ[ing] [a] device,
scheme, or artifice to defraud” or “engag[ing] in any act,
practice, or course of business”—not mere misstatements.
15 U.S. C. §77q(a)(1); 17 CFR §§240.10b–5(a), (c).
The Court attempts to cabin the implications of its
holding by highlighting several facts that supposedly
would distinguish this case from a case involving a secre-
tary or other person “tangentially involved in dissemi-
nat[ing]” fraudulent misstatements. Ante, at 7. None of
these distinctions withstands scrutiny. The fact that
Lorenzo “sent false statements directly to investors” in
e-mails that “invited [investors] to follow up with ques-
tions,” ibid., puts him in precisely the same position as a
secretary asked to send an identical message from her e-
mail account. And under the unduly capacious interpreta-
tion that the majority gives to the securities laws, I do not
see why it would matter whether the sender is the “vice
president of an investment banking company” or a secre-
tary, ibid.—if the sender knowingly sent false statements,
Cite as: 587 U. S. ____ (2019) 11
THOMAS, J., dissenting
the sender apparently would be primarily liable. To be
sure, I agree with the majority that liability would be
“inappropriate” for a secretary put in a situation similar to
Lorenzo’s. Ibid. But I can discern no legal principle in the
majority opinion that would preclude the secretary from
being pursued for primary violations of the securities laws.
* * *
Instead of blurring the distinction between primary and
secondary liability, I would hold that Lorenzo’s conduct
did not amount to a primary violation of the securities
laws and reverse the judgment of the Court of Appeals.
Accordingly, I respectfully dissent.