The three securities law Supreme Court cases decided this term pursuant to Section 10(b) of the Securities Exchange Act of 19341 are a mixed bag. Although one of the cases exhibits a strong animus toward Rule 10b-5 class action cases, the other two cases endorse and extend the holding of Basic Inc. v. Levinson,2 a case that did not command more than a plurality3 for its then controversial fraud-on-the-market theory for a presumption of reliance. Further, the two cases relying upon Basic were unanimous decisions, whereas the case narrowing the scope of Rule 10b-5 was a 5-4 decision.
Depending on the commentator, the current Supreme Court is lauded or criticized as a pro-business court. This tilt could be seen in Janus Capital Group Inc. v. First Derivative Traders,4 a class action by shareholders of Janus Capital Group Inc. (JCG), a publicly traded company that created the Janus family of mutual funds. The funds retained Janus Capital Management LLC (JCM) as its investment adviser and administrator.
