Courts from the United States Supreme Court on down have long grappled with what, precisely, constitutes “scheme liability” under the federal securities laws, and to what extent a scheme can be based solely on false or misleading statements. Rule 10b-5—promulgated under the Securities Exchange Act of 1934—provides multiple paths to liability, with only subsection (b) specifically referencing “untrue statement[s] of a material fact.” The Supreme Court made clear in Lorenzo v. SEC, 139 S. Ct. 1094 (2019), however, that such statements also may support violations of subsections (a) and (c), the antifraud provisions traditionally considered as addressing fraudulent “schemes.” But can false statements alone support scheme liability, or do Rules 10b-5(a) and (c) require something more?
In SEC v. Rio Tinto PLC, et al., through an opinion authored by Judge Dennis Jacobs, the Second Circuit Court of Appeals held that “something” beyond untrue statements, even assuming scienter and materiality, is required to support scheme liability in the Second Circuit: “[M]isstatements and omissions can form part of a scheme liability claim, but an actionable scheme liability claim also requires something beyond misstatements and omissions, such as dissemination.”[1] The Court declined, however, to define exactly what “something beyond” misrepresentations is needed to support scheme liability, virtually guaranteeing that the Court of Appeals will be asked to weigh in again on this issue in the...
ST. GEORGE, Utah (ABC4) — A Utah podiatrist and two nurses have been federally indicted on fraud charges after they allegedly submitted fraudulent claims to Medicare for skin substitute services, ...