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Rating:Supreme Court Rules on Janus Case Not Rated 5.0 Email Routing List Email & Route  Print Print
Monday, June 13, 2011

Supreme Court Rules on Janus Case

News summary by MFWire's editors

Janus Capital Group [see profile] chalked up a victory today after the Supreme Court issued a 5-4 ruling in a case involving allegedly misleading statements in some mutual fund prospectuses.

Click here to see the ruling.

"We conclude that JCM cannot be held liable because it did not make the statements in the prospectuses," wrote Justice Clarence Thomas.

"One 'makes' a statement by stating it. When 'make' is paired with a noun expressing the action of a verb, the resulting phrase is 'approximately equivalent in sense' to that verb," he wrote.

"For purposes of Rule 10b–5, the maker of a statement is the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it," he added. "Without control, a person or entity can merely suggest what to say, not 'make' a statement in its own right. One who prepares or publishes a statement on behalf of another is not its maker... This rule might best be exemplified by the relationship between a speechwriter and a speaker. Even when a speechwriter drafts a speech, the content is entirely within the control of the person who delivers it. And it is the speaker who takes credit—or blame—for what is ultimately said."

Thomas wrote that JCM "did not 'make' any of the statements in the Janus Investment Fund prospectuses; Janus Investment Fund did."

The ruling was picked up by several media outlets, including Dow Jones, Bloomberg, Reuters and the Associated Press.

With the ruling, the Supreme Court reversed an earlier decision made by the United States Court of Appeals for the Fourth Circuit, which had given

In an e-mailed statement to The MFWire, Mark Perry, Gibson Dunn partner and lead counsel for Janus, wrote: “We are delighted that the Supreme Court has agreed with our position that only the person ultimately responsible for a statement can be sued for fraud in a private class action under Rule 10b-5.  The Court’s clarification of the scope of primary liability under the securities laws is important not just for the parties to this case, but for all participants in the securities markets, including bankers, lawyers, accountants, and investment advisers.” 

Edited by: Armie Margaret Lee

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