U.S. Supreme Court appears reluctant to narrow securities laws




  • In US
  • 2018-12-03 18:29:44Z
  • By By Andrew Chung
The exterior of the U.
The exterior of the U.  

By Andrew Chung

WASHINGTON(Reuters) - U.S. Supreme Court justices on Monday appeared skeptical of further limiting the scope of who can be held liable for violating laws that protect investors from securities fraud as they weighed an appeal by a New York investment banker who had been banned from the industry.

Only eight of the nine justices were present to hear arguments over a ruling by a Washington-based federal appeals court that found Francis Lorenzo liable for participating in a scheme to defraud investors when he sent misleading emails about a financially-troubled clean energy company.

Most of the justices seemed to agree with the Securities and Exchange Commission (SEC), which had enforced the securities laws against Lorenzo, while Chief Justice John Roberts and fellow conservative Justice Neil Gorsuch, seemed sympathetic to him.

The court has a 5-4 conservative majority. Justice Brett Kavanaugh, a conservative appointee of Republican President Donald Trump, did not participate in the case because he was part of the three-judge appeals court panel that previously reviewed the dispute. Kavanaugh joined the high court in October.

Kavanaugh dissented in the appeals court ruling that upheld most of the SEC's liability findings against Lorenzo, and would have sided with the banker.

The high court must rule in the case by the end of June.

The dispute centers on whether a person who did not personally make fraudulent statements but merely passed them along can be found liable for engaging in a fraudulent scheme. Anti-fraud provisions of U.S. securities laws prohibit false statements and other conduct categorized as acts, devices, practices or schemes.

On Monday, all four liberal justices and conservative Justice Samuel Alito appeared to approve of Lorenzo's liability in the deceptive scheme.

Lorenzo's attorney Robert Heim said that sending emails was not inherently deceptive. Justice Ruth Bader Ginsburg asked why is it not "inherently deceptive to send a succession of untruths?"

Alito wondered why Lorenzo's actions would not "fall squarely" within the language of the SEC's rules.

In 2011 the Supreme Court narrowed the scope of who can be liable for false statements to those with ultimate authority over the statements.

Lorenzo, who served as the investment banking director at a broker-dealer called Charles Vista, sent the emails in 2009 seeking investors for a startup company's debt offering even though its energy-from-waste technology did not work.

The SEC in 2015 found that he made false statements and participated in a deceptive scheme by sending the emails, which a commission in-house judge said contained "staggering" false claims. The commission fined him $15,000 and barred him from working in the industry for life.

Citing the 2011 Supreme Court precedent, the District of Columbia U.S. Circuit Court of Appeals last year threw out Lorenzo's liability over the false statements, saying they were made by his boss. But the court said he was still liable for perpetuating the fraudulent scheme because he knowingly produced and sent the false statements in the emails. It ordered the SEC to reconsider the penalties against Lorenzo.

In appealing to the Supreme Court, Lorenzo said the SEC is trying to paint people who might be liable at most for aiding and abetting fraudulent schemes as the primary violators of securities laws.

On Monday, Gorsuch seemed to agree, noting that Lorenzo did not make the false statements in the emails he sent.

Lorenzo, who had the support of the powerful U.S. Chamber of Commerce business group, said that if the appeals court is not overturned it will lead to a swarm of abusive lawsuits, harming financial markets and the economy.


(Reporting by Andrew Chung; editing by Grant McCool)

COMMENTS

More Related News

U.S. judge blocks Mississippi
U.S. judge blocks Mississippi 'heartbeat' abortion ban

Mississippi Governor Phil Bryant, a Republican, signed the so-called "hearbeat bill" into law in March, and the measure had been due to take effect on July 1. Mississippi is one of several states, including Georgia and Alabama, where Republican-controlled legislatures have enacted strict anti-abortion measures this year in direct challenge to the U.S. Supreme Court's landmark 1973 Roe v. Wade decision legalizing a woman's right to terminate her pregnancy. Roe held that the due process clause of the 14th Amendment provides a fundamental right to privacy protecting a woman's right to abortion, though it allows states to restrict the procedure from the time a fetus can viably survive...

ACLU, Planned Parenthood sue over Alabama abortion ban
ACLU, Planned Parenthood sue over Alabama abortion ban
  • US
  • 2019-05-24 15:53:45Z

The lawsuit is one of several the groups have filed or are preparing to file against states that recently passed strict anti-abortion measures in an effort to prompt the U.S. Supreme Court to overturn Roe v. Wade, the 1973 landmark case that guarantees a woman's constitutional right to abortion. "This dangerous, immoral, and unconstitutional ban threatens people's lives and well-being and we are suing to protect our patients' rights," Leana Wen, president of the Planned Parenthood Federation of America, said in a statement. The ACLU's Alabama chapter and Planned Parenthood of America filed their complaint in federal court in Alabama on behalf of the Southern state's three abortion...

Federal lawsuit filed to block Alabama
Federal lawsuit filed to block Alabama's new abortion ban

MONTGOMERY, Ala. (AP) - A federal lawsuit filed Friday asks a judge to block an Alabama law that outlaws almost all abortions, the most far-reaching attempt by a conservative state to seek new restrictions on the procedure.

Abortion rights groups sue to block Alabama's near-total ban
Abortion rights groups sue to block Alabama's near-total ban

The near-total abortion ban in Alabama is scheduled to go into effect in November, but Planned Parenthood and the ACLU are suing to block it.

Trump
Trump's Justice Department Uses Julian Assange as Stalking Horse to Make Journalism a Crime

Photo Illustration by The Daily Beast/GettyThe Justice Department's sweeping new "superseding" indictment on Thursday of WikiLeaks founder Julian Assange under the Espionage Act is a bombshell that poses grave dangers for freedom of the press. The indictment would criminalize the encouragement of leaks of newsworthy classified information, criminalize the acceptance of such information, and criminalize publication of it. That's criminalizing journalism.And it doesn't matter whether you think Assange is a journalist, or whether WikiLeaks is a news organization. The theory that animates the indictment targets the very essence of journalistic activity: the gathering and dissemination of...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: US

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.