The Review of Securities & Commodities Regulation, Vol. 44, p. 205, 2011
6 Pages Posted: 20 Oct 2011
Date Written: October 19, 2011
In Janus Capital Group, Inc. v. First Derivative Traders, a divided Supreme Court created the unprecedented doctrine that the investment adviser to a mutual fund that drafted and distributed a false prospectus for the fund did not “make” a false statement under Rule 10b-5 because the fund, and not the adviser, had “ultimate authority” over the prospectus. The author argues that the decision was out of touch with reality because it failed to give proper consideration to the unique structure of the mutual fund industry. Furthermore, the decision is an illustration of judicial activism, and is likely to protect fund advisers and other corporate officials from liability for their own fraudulent actions.
Keywords: Rule 10b-5, Securities fraud, Mutual funds
Suggested Citation: Suggested Citation
Poser, Norman S., The Supreme Court’s Janus Capital Case (October 19, 2011). The Review of Securities & Commodities Regulation, Vol. 44, p. 205, 2011; Brooklyn Law School Legal Studies Paper No. 252. Available at SSRN: https://ssrn.com/abstract=1946465