Supreme Court rules securities company not liable to investors for misstatements

The Jurist

The US Supreme Court on Monday ruled 5-4 in Janus Capital Group v. First Derivative Traders that a service provider cannot be held primarily liable in a private securities fraud suit for aiding and participating in another company’s misstatements.

Section 10(b) of the Securities and Exchange Act prohibits any manipulation or deception in connection with the purchase or sale of securities.

The liability associated with the act, according to the court, does not extend to service providers that aided in the selling of securities where misinformation was involved.

Janus Investment Fund, a separate legal entity from Janus Capital Group (JCG), issued prospectuses containing misleading statements about measures to curb market timing.

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