Monday, October 3, 2011

Janus Capital Group Inc. v. First Derivative Traders, 131 S. Ct. 2296 (2011)

This year, the United States Supreme Court addressed the viability of securities fraud claims against secondary actors.  On June 14, 2011, the Supreme Court in Janus Capital Group Inc. v. First Derivative Traders, 131 S. Ct. 2296 (2011), brought much-needed predictability to the securities markets by articulating a “clean line” separating “those who are primarily liable (and thus may be pursued in a private [Rule 10b-5] suit) and those who are secondarily liable (and thus may not be pursued in private [Rule 10b-5] suit).”  Id. at 2302 n.6.
The Court, in a 5-4 opinion, concluded that Janus Capital Management (“JCM”), a registered investment adviser, could not be held liable in a private Rule 10b-5 suit for drafting allegedly misleading prospectuses issued by its mutual-fund client, the Janus Investment Fund.  Instead, the Court made clear that the only proper defendant in a private Rule 10b-5 suit is the “maker” of the statement—“the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it.”  Id at 2302.  “Without control,” the Court explained, “a person or entity can merely suggest what to say, not ‘make’ a statement in its own right,” and therefore “[o]ne who prepares or publishes a statement on behalf of another is not its maker.”  Id (quoting 17 C.F.R. § 240.10b-5(b))...
Applying this test, the Court concluded that “JCM did not ‘make’ any of the statements in the [Janus Investment Fund's] prospectuses”--even if it may have participated in the writing and dissemination of the prospectuses--because JCM’s involvement was “subject to the ultimate control” of the Janus Investment Fund.  Id at 2305.  “There was no allegation that JCM in fact filed the prospectuses and falsely attributed them to Janus Investment Fund,” the Court noted, “[n]or did anything on the face of the prospectuses indicate that any statements therein came from JCM rather than from Janus Investment Fund--a legally independent entity with its own board of trustees.”  Id  Accordingly, the statements in the prospectuses were made by Janus Investment Fund--not by JCM.  Id at 2304-05....
Even though the opinion does not expressly address the liability of persons or entities other than investment advisers who provide services to public companies, those service providers--bankers, lawyers, accountants, financial advisers, and others--should be able to invoke the decision to defend private lawsuits based on their work behind the scenes in preparing offering documents for their issuer clients.  The issuer--not the service provider--has “ultimate authority over the statement[s]” in its offering documents, and it is therefore the only “maker of [those] statement[s]”" under the Court’s rationale.  Id at 2302..
The U.S. Supreme Court's decision in Janus Capital Group, Inc. v. First Derivative Traders has left many investment company directors wondering whether they should take additional measures either to protect their funds and themselves from liability for prospectus errors or to provide their funds' investment adviser with additional incentives to ensure the accuracy and completeness of fund prospectuses.

2 comments:

  1. VIRUS REMOVAL

    Is Your Computer Sluggish or Plagued With a Virus? – If So you Need Online Tech Repairs
    As a leader in online computer repair, Online Tech Repairs Inc has the experience to deliver professional system optimization and virus removal.Headquartered in Great Neck, New York our certified technicians have been providing online computer repair and virus removal for customers around the world since 2004.
    Our three step system is easy to use; and provides you a safe, unobtrusive, and cost effective alternative to your computer service needs. By using state-of-the-art technology our computer experts can diagnose, and repair your computer system through the internet, no matter where you are.
    Our technician will guide you through the installation of Online Tech Repair Inc secure software. This software allows your dedicated computer expert to see and operate your computer just as if he was in the room with you. That means you don't have to unplug everything and bring it to our shop, or have a stranger tramping through your home.
    From our remote location the Online Tech Repairs.com expert can handle any computer issue you want addressed, like:
    • - System Optimization
    • - How it works Software Installations or Upgrades
    • - How it works Virus Removal
    • - How it works Home Network Set-ups
    Just to name a few.
    If you are unsure of what the problem may be, that is okay. We can run a complete diagnostic on your system and fix the problems we encounter. When we are done our software is removed; leaving you with a safe, secure and properly functioning system. The whole process usually takes less than an hour. You probably couldn't even get your computer to your local repair shop that fast!
    Call us now for a FREE COMPUTER DIAGONISTIC using DISCOUNT CODE (otr214424@gmail.com) on +1-914-613-3786 or chat with us on www.onlinetechrepairs.com.

    ReplyDelete
  2. Problem: HP Printer not connecting to my laptop.
    I had an issue while connecting my 2 year old HP printer to my brother's laptop that I had borrowed for starting my own business. I used a quick google search to fix the problem but that did not help me.
    I then decided to get professional help to solve my problem. After having received many quotations from various companies, i decided to go ahead with Online Tech Repair (www.onlinetechrepairs.com).
    Reasons I chose them over the others:
    1) They were extremely friendly and patient with me during my initial discussions and responded promptly to my request.
    2) Their prices were extremely reasonable.
    3) They were ready and willing to walk me through the entire process step by step and were on call with me till i got it fixed.
    How did they do it
    1) They first asked me to state my problem clearly and asked me a few questions. This was done to detect any physical connectivity issues with the printer.
    2) After having answered this, they confirmed that the printer and the laptop were functioning correctly.
    3) They then, asked me if they could access my laptop remotely to troubleshoot the problem and fix it. I agreed.
    4) One of the tech support executives accessed my laptop and started troubleshooting.
    5) I sat back and watched as the tech support executive was navigating my laptop to spot the issue. The issue was fixed.
    6) I was told that it was due to an older version of the driver that had been installed.
    My Experience
    I loved the entire friendly conversation that took place with them. They understood my needs clearly and acted upon the solution immediately. Being a technical noob, i sometimes find it difficult to communicate with tech support teams. It was a very
    different experience with the guys at Online Tech Repairs. You can check out their website www.onlinetechrepairs.com or call them on 1-914-613-3786.
    Would definitely recommend this service to anyone who needs help fixing their computers.
    Thanks a ton guys. Great Job....!!

    ReplyDelete