March 28, 2019


WASHINGTON, D.C. – The U.S. Supreme Court ruled in the case of Lorenzo v. SEC Wednesday to uphold the Securities and Exchange Commission’s actions against a financial services professional found to have misled investors about a company’s financial performance. In a 6-2 decision, the Court held that Francis V. Lorenzo, an investment banker, could be held liable for taking part in a scheme to defraud investors even if he did not originally “make” the misleading statements per Rules 10b-5(a) and (c) of the Securities Exchange Act, as well as the relevant statutory provisions. 

In response to the ruling, Laura H. Posner, Partner at Cohen Milstein Sellers & Toll and a member of the firm’s Securities Litigation & Investor Protection practice, issued the following statement:

“We applaud the Supreme Court’s ruling in this case as a critical victory for the investing public in the fight against fraud. By reaffirming the SEC’s authority to hold Mr. Lorenzo liable, this decision strengthens our regulators’ ability to hold those who take part in schemes to mislead investors accountable and supports a robust reading of existing securities law to stamp out fraud at the expense of shareholders.”  

Prior to the decision, Laura H. Posner and Eric Berelovich of Cohen Milstein filed an amicus brief in support of the SEC’s position. 

Writing for the majority, Justice Stephen Breyer noted in the Court’s opinion that “Congress intended to root out all manner of fraud in the securities industry” and stated legislators “gave to the commission the tools to accomplish that job.” Furthermore, the opinion highlighted that “even a bit participant in the securities market ‘may be liable as a primary violator under [Rule] 10b-5’ so long as ‘all of the requirements for primary liability … are met.’”

About Cohen Milstein:

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Media Contact:

Desmond Lee