This week, the Supreme Court held that knowing distributors of another’s false statements still could be primarily liable under parts of Rule 10b-5, even though they didn’t “make” the statements under prior precedent. The Lorenzo decision seems clear and common-sense on its face, but represents a battle in the weeds of an administrative case that’s likely to have significant ramifications over who private civil litigants can sue under the Securities Laws.
Rule 10b-5 prohibits any person from:
- "employ[ing] any device, scheme or artifice to defraud" [Scheme]
- "mak[ing ...
This week, the SEC's Division of Investment Management issued a letter seeking industry and public input on custody issues arising from digital assets.
The "Custody Rule," Rule 206(4)-2 under the Advisers Act of 1940, provides it is a fraudulent act or practice to have custody of client assets, unless an adviser complies with Custody-Rule requirements, including among others, by a qualified custodian subject to annual independent audits.
The Division's recent Guidance Update on custody issues focused on inadvertent custody (e.g. where boilerplate in the adviser’s agreement ...