What does it mean to “make” a statement? This seemingly simple question was at the center of the U.S. Supreme Court’s decision in Janus v. First Derivative Traders (09-525), one of the more closely watched securities fraud cases of the current term. At issue in Janus was whether an investment advisor to a mutual fund could be liable for allegedly false statements made in the mutual fund’s prospectus. In its decision, the Supreme Court held that the advisor could not be liable because the advisor did not “make” any of the statements.

The decision in Janus is the latest in a series of cases from the Supreme Court defining the potential liability of so-called secondary actors — entities that are not accused of having actually committed securities fraud but are instead charged with having enabled the primary actor to do so. With this latest decision, the Supreme Court has again narrowed the universe of secondary actors who might find themselves named as a defendant in a complaint alleging violations of the securities laws. While undoubtedly unpopular with investors, the Janus decision is good news for other secondary actors, including lawyers and accountants, who are often intimately involved with the preparation of prospectuses and might have otherwise found themselves in the cross hairs of the next wave of securities lawsuits.

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