To be liable under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5,1 a defendant must have “made” a misstatement or omission of material fact.2 This “attribution” requirement mandates that a statement (or omission) must be attributed to a particular defendant at the time of dissemination for liability to attach. In Janus Capital Group Inc. v. First Derivative Traders, the Supreme Court set forth a new, and seemingly categorical, rule for defining attribution: “the maker of a statement is the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it.”3 This rule has important implications for the liability of corporate officers and directors, as so-called “insiders,” that the lower courts have only started to address.
The ‘Janus’ Case
Janus Capital Management LLC (JCM), a mutual fund adviser, was sued under Rule 10b-5 for alleged misrepresentations in prospectuses issued by its client, Janus Investment Fund. The fund had been created by Janus Capital Group Inc. (JCG), which owned JCM, but both JCG and JCM were legally separate from the fund.
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