Circuit Split Reflects Disagreement About the Relationship Between Scheme Liability and SEC Rule 10b-5(b)

Historically, federal courts generally agreed that scheme liability under SEC Rule 10b-5(a) and (c) requires something more than a misstatement or omission — with misstatements and omissions typically being litigated under Rule 10b-5(b) instead. However, the SCOTUS in Lorenzo v. SEC held that an individual who disseminates a misstatement, without other fraudulent conduct, is potentially liable under the scheme liability provisions of Rule 10b-5. Subsequently, a circuit split has emerged over the scope of Lorenzo's holding.

7 minute readMarch 01, 2023 at 12:05 AM
By
Stefan Atkinson
Yi Yuan
Circuit Split Reflects Disagreement About the Relationship Between Scheme Liability and SEC Rule 10b-5(b)

Historically, federal courts generally agreed that scheme liability under SEC Rule 10b-5(a) and (c) requires something more than a misstatement or omission — with misstatements and omissions typically being litigated

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