Rule 10b-5 and its statutory forebear, Section 10, rank first among equals in punishing and deterring securities fraud. 17 C.F.R. §240.10b-5 and 15 U.S.C. §78(j), respectively. The first of this three-part series exposited Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135 (2011), which defines who “makes” a misrepresentation or omission in violation of the regulation.

“Scheme” liability, as explicated by the Supreme Court in Lorenzo v. S.E.C., 587 U.S. ___, 139 S. Ct. 1094 (2019), shall be the focus of this article, an essential precursor to our final installment analyzing S.E.C. v. Rio Tinto PLC, 41 F.4th 47 (2022), the Second Circuit’s most recent extrapolation of both high court landmarks.

‘Lorenzo’