*1
Costumes, Inc.,
non-prevailing party’s
L.P. v. Morris
243 F.3d
ness of the
claims or
(4th
(2)
Cir.2001);
defenses;
(3)
motivation;
party’s
see also Knit
waves,
(Inc.),
Lollytogs
objec
Inc. v.
Ltd.
71 F.3d whether the claims or defenses were
(2d Cir.1995).
(4)
996, 1012
unreasonable;
tively
compensation
Fogerty
Fantasy,
and deterrence. See
determining
When
the amount of
Inc.,
510 U.S.
534 n.
statutory damages to
copyright
award for
(1994).
1023,
For the reasons stated the order D. The District Court is AFFIRMED. District Court’s Decision Not Attorneys’
to Award Fees
Section 505 of the Copyright Act
provides that a district court may “in its ...
discretion award a reasonable attor
neys fee to the prevailing party” copy
right action. 17 U.S.C. 505. The Dis
trict Court declined to Appellants award
attorneys fees. PACIFIC INVESTMENT MANAGE
When determining whether to MENT Capi COMPANY and RH LLC fees, attorneys award may LLC, district Plaintiffs-Appel courts tal Associates lants, consider such factors as the frivolous- Appellants support contended that revenues must their claim. higher, have been but offered no evidence to *2 Investment Funds: Pacific
PIMCO Al., Series,
Management Et
Plaintiffs, Joseph LLP and P.
MAYER BROWN Defendants-Appellees,
Collins, Al., Inc., Defendants.* Et
Refco
Docket No. 09-1619-cv. Appeals, Court of States
United Circuit.
Second 14, 2009.
Argued: Dec. April
Decided: parties stated above. is directed to amend *The Clerk of Court listing caption to conform to official *3 NY, defendant-appellee Joseph P. for Col- lins. Paik, Special Counsel
Christopher (David Becker, Counsel, and M. General Stillman, Solicitor, brief), Jacob H. Commission, Exchange Securities DC, amicus curiae the Washington, Exchange Commission. Securities *4 (Donald Ayer B. and Cooper David M. Romatowski, brief), on the Jones Peter J. York, NY, DC, Washington, and Day, New support Law Firms in of for amicus curiae appellees. Jaffe, P.C., Jaffe,
Erik Erik S. S. Wash- DC, amicus curiae former ington, for SEC Officials, Law Fi- Commissioners and Professors, and Law nance Securities in support appellees. Practitioners of (Brian Faughnan, Lucian T. Pera S. on Reese, LLP, brief), the Adams and Mem- (Susan Hackett, phis, TN Senior Vice (Stuart Grant, M. J. Sabella James Counsel, President and General Associa- Megan McIntyre, D. Szydlo, F. Brenda Counsel, Corporate Washington, of tion Mackintosh, M. on the and Christine brief), DC, curiae on the for amicus Associ- P.A., brief), Eisenhoffer New Grant & of Corporate support ation of Counsel DE, York, NY, plain- for Wilmington, appellees. Manage- Investment tiff-appellant Pacific (Lawrence Robbins, Gary A. Orseck S. Company LLC. ment Untereiner, Alan E. Kath- Roy Englert, T. (Salvatore Graziano, Coffey J. John P. Taaffe, Zecca, and Damon W. on erine S. Browne, Weiss, Ann M. Elliott John C. Russell, brief), Robbins, Englert, Or- Robinson, on the Jeremy P. Lipton, LLP, seck, Untereiner & Sauber Washing- brief), Berger Litowitz & Gross- Bernstein (Robin ton, and Amar D. S. Conrad DC LLP, York, NY, plaintiff- for mann New Sarwal, Litigation National Chamber Cen- Capital RH Associates LLC. appellant brief), ter, DC, on the Washington, (George A. Borden and K. Villa John of curiae of Commerce amicus Chamber brief), Singer, Williams & Craig D. on support of States America United DC, LLP, Washington, for defen- Connolly appellees. LLP. Mayer Brown dant-appellee (Jonathan PARKER, P. Bach Before: CABRANES and William J. Schwartz AMON, District brief), Judges, and Circuit Cassidy, Kathleen E. York, LLP, Judge.** New Cooley Godward Kronish
** York, Amon, by designation. sitting of New B. of the United The Honorable Carol District Court for the Eastern States District
Judge parties pur- PARKER concurs in the tween Refco and third for the opinion pose concealing court judgment and Refco’s uncollectible (2) concurring opinion. portions debt and drafted of Refco’s separate and files a security offering documents that contained CABRANES, A. Judge: JOSÉ Circuit false information. Although defendants al- presents primarily two appeal This legedly created false statements that in- about questions scope of federal securi upon, relied all vestors of those statements 10(b) whether, § ties laws: under Refco, Mayer were attributed to and not (“Ex Exchange the Securities Act of 1934 Collins, at Brown or the time of dissemina- Act”), § change 78j(b), 15 U.S.C. and Se tion. Exchange curities and Commission Rule that a secondary We hold actor1 (“Rule 5”), 17 10b-5 C.F.R. 10b— private can liable in a damages be held 240.10b-5, corporation’s outside coun 10b-5(b) brought pursuant action to Rule sel can be liable for false only for false statements attributed to the create, attorneys allegedly those but which secondary-actor defendant at the time of *5 firm were attributed to law or its attribution, dissemination. plain Absent attorneys at time the statements were they tiffs cannot show relied on defen (2) disseminated; plaintiffs’ and whether statements, dants’ own false partic and claims that in participated defendants ipation in the creation of those statements scheme to defraud investors are foreclosed amounts, most, aiding at to abetting and Court’s decision Stoner securities fraud. We further hold that Partners, idge Investment LLC v. Scienti plaintiffs’ claims that partici defendants Inc.,
fic-Atlanta,
552 U.S.
128 S.Ct.
pated in a scheme to defraud investors are
(2008).
761,
lapse. transactions seventeen of these sham loan Refco contact with primary the firm’s was 2005, representing 2000 and both between charge of the billing partner According plaintiffs, Refco and RGHI. Refco was a lucrative account. Refco negotiat- included defendants’ involvement larg- Mayer Brown and Collins’ client for loans, drafting of the ing the terms client. personal est relating the documents to the revising loans, transmitting the documents to the model, Refco part of its business As custody participants, retaining of and customers so that credit to its extended copies doc- distributing the executed “margin”- i.e., trade trade on they could — uments. from money borrowed in securities 1990s, In Refco customers Refco. the late allege Plaintiffs also that defendants are trading losses and conse- massive suffered responsible appearing for false statements repay hundreds of quently were unable Offering in three Refco documents: an margin loans extend- millions of dollars an unregistered Memorandum for bond of- properly by Refco. Concerned fering July (“Offering ed Memoran- *6 (2) “write-offs” accounting dum”), for these debts as Registration a Statement for a survival, company’s registered offering threaten the subsequent would bond Refco, Statement”), help with the of defen- allegedly Reg- and a (“Registration dants, arranged a series of sham transac- pub- for Refco’s initial istration Statement designed to conceal the losses. in offering August tions lic of common stock (“IPO Statement”). Registration that Refco plaintiffs allege Specifically, contained false Each of these documents uncollectible debts to Refco transferred its they misleading statements because (“RGHI”) entity Inc. Group Holdings, —an to disclose the true nature of Refco’s failed by controlled Refco’s Chief Executive Offi- condition, financial which had been con- purport- exchange cer-—in receivable cealed, part, through the loan transac- Recog- edly from RGHI to Refco. owed tions described above. debt owed to it nizing large allegedly participated Defendants entity suspicion arouse related would Refco, contained allegedly creation of the false statements regulators, and investors defendants, above. in a in each of the documents identified help engaged with the of attorneys Mayer and Brown at the end Collins other of sham loan transactions series portions of year pay allegedly reviewed and revised quarter and each fiscal to of each Offering Memorandum and attended It did so off the RGHI receivable. another drafting Collins and parties, third who then sessions. loaning money to RGHI, attorney personally also Mayer which Brown the same amount loaned Discussion & Management off Refco’s drafted pay in turn used the funds to (“MD A”) portion of the Offer- Analysis & Days period after the fiscal receivable. which, Memorandum, according to
closed,
ing
repaid
all of the loans were
and
Refco’s business and
discussed
paid
plaintiffs,
a fee for their
parties
third
were
way
in a
that defen-
financial condition
in the scheme. The result
participation
Offering
provide
private right
dants knew to be false. The'
securities laws
no
Memorandum was used as the foundation
action. See id. at 311-14. The District
Statement,
Registration
for the
which was
plaintiffs’
Court also dismissed
Rule 10b-
substantially
5(a)
(c)
similar
content. Accord-
liability”
claims for “scheme
further
ing
plaintiffs,
defendants
assist-
upon concluding
that the
Court’s
preparation
Registration
ed in the
of the
Stonevidge
decision in
foreclosed
theo-
by reviewing comment letters
Statement
ry
liability.
id. at
Finally,
See
314-19.
Exchange
from the Securities and
Com-
the District
Court dismissed
(“SEC”)
participating
mission
in draft-
20(a)
§
plaintiffs
claims because
failed ade-
ing
Finally,
plaintiffs allege
sessions.
quately
plead
an underlying violation of
directly
defendants were
in re-
involved
federal securities law.
id. at
See
viewing
Registration
the IPO
received,
they
pre-
Statement because
DISCUSSION
reviewed,
sumably
the SEC’s comments on
filing.
We review de novo a District Court’s
Offering
Both the
Memorandum and the
claim,
dismissal for failure to state a
see
Registration
IPO
note that
Statement
12(b)(6), assuming
Fed.R.Civ.P.
all well-
Mayer
represented
Brown
Refco in con- pleaded, nonconclusory
allegations
factual
nection with those
Reg-
transactions. The
complaint
to be true. See Ashcroft
—
istration Statement does not mention
-,
Iqbal,
U.S.
S.Ct.
Mayer Brown. None of the documents
1949-50,
(2009);
found that no those docu- change, ments were attributed to defendants and (a) plaintiffs that had alleged device, scheme, therefore con- To employ any or duct akin to aiding abetting, defraud, for which artifice to
(b) of which were not attributed to them the any make untrue statement To disseminated; fact or to omit to state a time the statements a material were (2) necessary allegations fact order the in the com- material whether made, in the the statements to state a claim for plaint make are sufficient 10b-5(a) circumstances under which light liability” “scheme under Rule made, misleading, (c).2 or they were
(a)
act,
any
practice,
or
engage
To
operates
which
or
course of business
5(b)
I. Plaintiffs’ Rule
Claim
10b—
as a fraud or deceit
operate
would
Plaintiffs
the District
assert
any person,
upon
in holding
attorneys
Court erred
who
or
purchase
sale
connection with
participate
in the
of false state
any security.
in a
dam
private
ments cannot be liable
§
240.10b-5.
C.F.R.
if
ages action
the statements are not at
that,
Supreme Court has held
The
attorneys
tributed to those
at the time of
private damages
maintain a
action under
Along with the
dissemination.
SEC as
10(b)
10b-5,
and Rule
curiae, plaintiffs argue that attri
amicus
(1) a material
plaintiff
prove
must
only
by
bution is
one means
which attor
or omission
the de-
misrepresentation
neys
and other
actors can incur
(3)
(2)
fendant;
scienter;
a connection liability
They urge
fraud.
securities
us
or
misrepresentation
between the
omis-
adopt
a “creator standard” and hold
or sale of a securi-
purchase
sion and
creating
that a defendant can be liable for
(4)
misrepresenta-
ty;
upon
reliance
on,
rely
a false statement
investors
(5)
loss;
omission;
economic
tion or
regardless
whether
statement
(6) loss causation.
attributed to the defendant at the time of
Stoneridge, 552 U.S.
SEC,
According
dissemination.
to the
“[a]
Broudo,
Pharm., Inc. v.
(citing Dura
if
person creates a statement
...
U.S.
L.Ed.2d 577
336, 341-42, 125 S.Ct.
(2005)).
statement
or
[2]
if he
[1]
provides
is written or
the false or
spoken
misleading
him,
person
puts
information that another
then
primarily two issues
appeal
This
raises
regarding
scope
of Rule 10b-5
into
statement,
[3]
if he allows the
whether defendants
statement
to be attributed to him.” Brief
private actions:
10b-5(b)
Supporting
can be
under Rule
for false
for SEC as Amicus Curiae
liable
(“SEC Br.”)
drafted,
*8
at 7.3
they allegedly
Plaintiffs-Appellants
that
but
nothing
§
emphasize
opinion
able under
10b and Rule 10b-5 are entitled
2. We
that
this
liability
respect
Piper v.
scope
to
to little or no deference. See
Chris-
limits the
Indus., Inc.,
1,
27,
actions,
430 U.S.
42 n.
government
97
enforcement
whether
Craft
926,
("[The
S.Ct.
Defendants
under
167-68,
the
at
securing
bonds.
Id.
attorneys
participate
who
precedents,
reviewing
S.Ct. 1439. After
the text and
cannot
of false statements
be
10(b),
history
§of
the Supreme Court con-
at
explicit attribution
liable absent
cluded that “the
[Exchange
Act] does
Without attribu-
time of dissemination.
reach
not itself
those who aid
contend,
and abet a
tion,
secondary actors
defendants
10(b)
177,
violation.” Id. at
primary
violation of Rule
do not commit
otherwise,
To
it explained,
hold
10b-5(b)
amounts,
and their
conduct
“impose
liability
would be to
...
when at
most,
aiding
abetting.
recovery
least one element critical for
un-
requires
claims
Analyzing
parties’
180,
der 10b-5 is absent: reliance.” Id. at
history
requirement
brief
of the attribution
Id. History A. Attribution Re- We considered the effect of Central
quirement
private
Bank
litigation
securities
against secondary
in Shapiro
actors
primary liability
The distinction between
Cantor,
(2d Cir.1997).
153 insufficient); prospectuses Vosgerichian bar of Central prohibitive fall within 10(b) International, 862 allege must Commodore A claim under Bank. (E.D.Pa.1994) (alle- 1371, F.Supp. mis- 1378 has a material a made defendant gations an in- that accountant ‘advised’ and indicating or omission statement ‘guid[ed]’ making allegedly client in connection to deceive defraud tent misrepresentations insuffi- security. of a fraudulent purchase or sale cient). (footnote omitted); also 720-21 see Id. at (“[I]f par have Other courts held third 720 Central Bank is to have
id. at may primarily ties be liable for state a defendant must actual- any meaning, real by made in which the de misleading statement in ments others ly make a false or 10(b). significant participation. fendant had to be held liable under Section order See, Toolworks, merely e.g., In re 50 short of such conduct is Anything Software (ac (9th Cir.1994) F.3d n. 3 abetting, and no matter how 628 aiding and be, may primarily countant may it is not be liable based substantial aid ‘significant on its role in trigger liability to under Section enough 10(b).” editing’ a letter sent the issuer to the (quoting In re MTC Elec. Techs. SEC); In re ZZZZ Best Securities Liti Litig., F.Supp. 898 987 Shareholders (C.D.Cal. (E.D.N.Y.1995))). gation, F.Supp. 1994) (an accounting firm that ‘intri was that Central Bank re- principle The cately involved’ the creation of false the attribution of false statements quires ‘resulting decep documents and their at the time of dissemina- to the defendant primary tion’ is a violator of section 1998 decision in appeared tion first our 10(b)).” LLP, F.3d Young v. Ernst & Wright Wright against Elec., at involved claims (quoting MTC Id. 174-75 Young 986) (alterations omitted). firm Ernst & and alle- accounting F.Supp. at We orally approved the firm gations that, in had Shapiro, we followed the noted misleading financial corporation’s false and “bright approach. line” Id. We therefore statements, subsequently were dis- which that “a actor cannot incur held Id. at 171. public. seminated to the primary liability under for a [Rule 5] 10b— statement not attributed to actor Bank, that, after explained We Central Wright the time of its dissemination.” Id. generally adopted had either courts also made clear that attribution is neces- partic- “bright line” test or “substantial sary satisfy the reliance element of a pri- ipation” distinguish test between private damages action under Rule 10b-5. aiding mary violations of Rule 10b-5 (“Reliance only representations Id. abetting: form the made others cannot itself ba- held that a third “Some courts have (alteration liability.” and internal sis of approval review and of docu- party’s omitted)). Because the quotation marks containing ments fraudulent on which misrepresentations 10(b) not actionable under Section be- claims were based were attributed one must make the material mis- cause Young, complaint held that the Ernst & to be a or omission order statement state a claim under Rule 10b-5. failed to See, primary e.g., violator. In re Ken- Id. Secu- Square Corporation dall Research re- Despite Wright’s seemingly clear Litigation, F.Supp. rities (accountant’s (D.Mass.1994) attrib- quirement that false statements be ‘review and *10 defendant, subsequent our de- uted to the approval’ of financial statements and 154 (2d Kasaks, 300, uncertainty or Novak v. 314 may have created
cisions Cir.2000). Scholastic, ambiguity respect with to when attribution Like these cases did 2001, required. In in In re Scholastic Wright not cite or Central Bank. a Corp. Litigation, we held that Securities Notwithstanding uncertainty this re-we for corporate officer could be liable mis- cently importance confirmed the of attribu- representations by corporation, made against secondary tion for claims actors. notwithstanding the fact that none of the Touche, In in Lattanzio v. Deloitte & specifically at- statements issue were accounting we considered claims that the tributed to him. 252 F.3d 75-76. We had, alia, firm & Deloitte Touche inter fi- explained president that as “vice for approved and or misleading reviewed false nance and relations” the defen- investor quarterly public statements issued primarily responsible dant “was Scho- company. 476 at 151-52. F.3d We held lastic’s communications with investors and against that “to state a 10b claim an industry analysts. He was involved accountant, plaintiff issuer’s allege must drafting, reviewing producing, dis- and/or a misstatement that is attributed to the seminating of the misleading false and ‘at accountant the time of its dissemina- during statements issued Scholastic tion,’ rely and cannot on the accountant’s basis, period.” class Id. On that we al- alleged drafting compi- assistance in the or against lowed claims the defen- filing.” (quoting lation of a Id. at 153 proceed. opinion dant to Our Scholastic 174). Wright, 152 explained F.3d at We on, cite, rely did not or Wright even imposing liability that on accountants who Central Bank and contained no discussion approve misleading review and primary of the distinction between viola- contrary Wright’s rejection would be tions of Rule and aiding 10b-5 and abet- participation” the “substantial test. Id. at ting. against Because the claims Deloitte Scholastic, Since district courts in our & Touche were not based on the “account- have struggled Circuit to reconcile its statement,” ant’s articulated we held that holding our holding Wright. earlier Rule 10b-5 did not extend to the See, e.g., In Group, re Warnaco Inc. Sec. (“Under defendants. Id. at 154 Central Litig., F.Supp.2d 314-15 n. 3 Bank, Deloitte is not merely liable for (S.D.N.Y.2005) (distinguishing Scholastic assisting filing Wright from ground that the for added)). quarterly (emphasis statements.” mer involved “a corporate insider rather actor”), than an outside sub nom. aff'd B. Creator Standard v. Attribution Lattanzio, 147; Crossing F.3d Global Standard Litig., F.Supp.2d Ltd. Sec.
(S.D.N.Y.2004) J.) urge Plaintiffs and the to adopt SEC us (Lynch, (discussing the require “creator” standard that would us Wright tension between and Scholastic to hold that a defendant can be liable for noting that might “Scholastic indicate creating a false statement investors Wright’s some relaxation of [attribution] on, rely regardless of whether that state- requirement”). Several of our decisions ment have is attributed to the defendant at the corporate also held officers can They time of provided argue be liable for false information dissemination. by analysts, proposed their standard is consistent with disseminated even if no They corporate distinguish statements are attributed to the the law of the Circuit. Wright ground officers themselves. See Rombach v. on the Lattanzio (2d Chang, Cir.2004); F.3d the defendants in those cases were not
155 explicitly adopted by secondary the false state- been created alleged to have rather, merely re- actor. See id. question, but ments by others. created false statements viewed that, 1. Attribution Is Consistent with not- the SEC contend
Plaintiffs
Stoneridge
language
sug-
withstanding the broad
always required, these
attribution is
gests
Supreme
directly
has never
The
Court
a
holding that
de-
are best read as
cases
addressed whether attribution at the time
a
if he or she creates
can be liable
fendant
required
secondary
is
of dissemination
a
or allows
misleading
statement
false
in a private damages
actors to be liable
him or
to be attributed to
false statement
brought pursuant
action
to Rule 10b-5.
support
some
position
Their
finds
her.
Nevertheless,
the Court’s recent decision
recent cases. See
from one of our
dicta
Stoneridge
is instructive.
Finnerty, 533 F.3d
States v.
United
Supreme
The
Court’s focus on reliance
(2d Cir.2008) (describing Wright as
rule,
a
Stoneridge favors
such as attri
Bank, a defen-
holding that “under Central
bution,
designed
preserve
that is
primary liability’
incur
for a
dant ‘cannot
private right
element of the
of action avail
by him nor ‘attrib-
neither made
statement
Wright,
able under Rule 10b-5. See
the time of its dissemina-
uted to
at
[him]
(noting
F.3d at 175
that an attribution
”
added) (quoting Wright,
(emphasis
tion’
requirement prevents plaintiffs from “cir
175)).
at
cumventfing]
requirements
the reliance
Notwithstanding the dicta
United
Act”).
[Exchange]
In Stoneridge,
reject the creator
Finnerty,
States v.
we
dealt primarily
deceptive
which
con
secondary
actor
un-
standard for
statements,
duct rather
than false
An
require-
Rule 10b-5.
attribution
der
rejected
brought pursuant
claims
Court
ment more consistent with the
is
against
issuing
Rule 10b-5
an
firm’s cus
of sec-
guidance
question
Court’s
on the
153, 128
suppliers.
tomers and
at
U.S.
Furthermore,
ondary
liability.
actor
a
761. The Court held that
S.Ct.
indistinguishable
standard is
from
creator
failed as a matter of law because
claims
participation”
the “substantial
test
they
not
plaintiffs could
demonstrate
it
Wright,
since
have disavowed
upon
deceptive
oivn
“reified]
[defendants’]
incompatible
preference
with our stated
issuing
conduct” and because
was
“[i]t
[the
“bright
Wright,
for a
line” rule. See
Charter,
[defendants],
that mis-
firm]
F.3d
led
auditor and filed fraudulent finan-
its
160-61,
secondary
cial
Id. at
Accordingly,
actors
statements.”
128 S.Ct.
added);
(emphasis
in a
action under Rule
id. at
private
can be liable
(“Reliance by
plaintiff upon
that are
only
10b-5 for
those statements
deceptive
them. The mere
acts is an essential
explicitly attributed to
defendant’s
ac-
secondary
being
private
a
actor as
element of the
10b
cause of
identification of
added)).
transaction,
(emphasis
tion.”
We think that
public’s
involved in a
or the
secondary
reasoning
actor “is
is consistent with an attribution
understanding that a
requirement in the context of claims based
the scenes” are alone insuf
work behind
Lattanzio,
plaintiff
If a
must
actor’s own
Toolworks,
conveyed
public description
to the
of In re
on statements
Software
(9th Cir.1994)
615,
source and not attributed
n.
through another
and In
a claim under
state
ZZZZ
Litigation,
to the defendant —to
re
Best Securities
5(b).
(C.D.Cal.1994)).
Rule
F.Supp.
We
10b—
however,
explain,
went on to
that the Sec-
Stoneridge
generally,
More
rejected
had
a substantial par-
ond Circuit
that reliance is
proposition
stands for the
a
ticipation
bright
test
favor of
line rule.
private
actions un
element
the critical
Id.
proposition,
general
This
der Rule 10b-5.
secondary
issue of
specific
applied to
A
effectively
creator standard is
supports an attribu
liability,
actor
further
indistinguishable
partic
from a substantial
necessary
Attribution
requirement.
tion
SEC,
ipation
According
test.
to the
are
reliance. Where statements
show
liability
creator standard would extend
a well-known nation
publicly attributed to
secondary
“supplied
actors who
the writer
firm,
accounting
buyers
al
and sell
law or
misleading
with false or
information” or
(and
general
ers of securities
the market
“
a
misleading
‘caused’
false or
statement
likely
accuracy
ly) are more
to credit the
if
be made”-—even
the statement dis
of the
of those statements. Because
firm’s
seminated to the public made no mention
may
imprimatur, individuals
be comforted
Br. at
10.4
defendant. SEC
As
supposedly impartial
assessment
Lattanzio, however,
explained
a
and, accordingly,
purchase
be induced to
a
“[pjublic understanding
secondary
that [a
security.
explicit attri
particular
Without
is at work
actor]
behind the scenes does
firm, however,
bution to the
reliance on not
an exception
requirement
create
to the
only
participation
can
be shown
firm’s
that an actionable misstatement
made
be
“an
chain ...
through
indirect
too remote
[secondary
actor]”
“[u]nless
liability.”
Stoneridge,
552 U.S.
public’s understanding is based on the
at 175. Application Re-
C. of Attribution 10b-5(a) (c)
quirement
II. Plaintiffs’ Rule
and
(“Scheme Liability”)
Claims
Applying the attribution standard
alleged
misleading
to the
false and
state
The District Court
dismissed
case,
10b-5(a)
(c)
ments in this
we conclude that the
Rule
plaintiffs’
and
claims on
properly
District Court
dismissed plain
ground
Supreme
that the
Court’s deci
10b-5(b)
against Mayer
tiffs’ Rule
claims
Stoneridge
plaintiffs’
sion in
foreclosed
Brown and Collins. No statements in the
theory
liability.”
agree
of “scheme
We
Memorandum,
Offering
Registration
adopt
with the District Court and we
its
Statement,
Registration
or the IPO
State
analysis
careful
claims
Collins,
ment are attributed to
and he is
10b-5(a)
(c).
brought pursuant to Rule
not
any
even mentioned
name
Refco,
F.Supp.2d
See In re
at 314-19.
Accordingly, plaintiffs
those documents.
Stoneridge, plaintiffs
In
sought to hold
any
cannot show reliance on
of Collins’
companies
two
participation
liable for their
Lattanzio,
statements. See
476 F.3d at
in sham transactions that
an
allowed
issuer
154; Wright,
tions.”
that,
agree
was
“[a]s
therefore
We
person” lia
Any claim for “control
Refco, not the
Stoneridge, it was
case in
20(a)
§
Act8
bility
Exchange
under
Defendants, that filed fraud-
Mayer Brown
predicated
primary
on a
violation
must be
statements;
nothing the
ulent financial
78t(a) (im
§
of securities law.
U.S.C.
it
Defendants did made
nec-
Mayer Brown
liability on those who
posing
“control[ ]
to record the
essary or inevitable for Refco
fraud);
for securities
any person liable”
(quoting
it
transactions as
did.” Id.
Ston-
Rombach,
see,
porate
president
vice
could be
liable
CONCLUSION
being
disseminating
“involved” in
mislead-
statements,
ing
requiring
without
public
summarize, we hold:
To
attribution of the statements to him.
It is
(1)
actors,
Secondary
such as defen-
true that the defendant in
Corp.
Scholastic
dants,
in private
can
held liable
dam-
be
insider,
corporate
rather
than an
was
10(b)
§
brought pursuant
action
to
ages
However,
lawyer.
outside accountant or
10b-5(b) only
Rule
for false state-
distinguish Wright
the court did not
to the
actor
ments attributed
basis; indeed,
Wright
it did not cite
dissemination;
the time of
all. At least one district court
in this
(2)
for “scheme liabili-
Plaintiffs’ claims
interpreted
say
Circuit
Corp.
Scholastic
10(b)
§to
and Rule
ty” brought pursuant
Wright’s
that we had relaxed
attribution
10b-5(a)
(c)
foreclosed
the Su-
are
requirement. See In re
Crossing,
Global
In-
preme
Stoneridge
Court’s decision
Lit.,
322 F.Supp.2d
Ltd. Sec.
331-33
Partners,
v.
vestment
LLC
Scientific-At-
(S.D.N.Y.2004)
J.).
(Lynch,
Subsequently,
lanta,
761, 169
552 U.S.
require
we reaffirmed
strict attribution
(2008);
L.Ed.2d 627
Lattanzio,
ment
mentioning
without
(3)
plaintiffs
Because
cannot establish a
Corp. Finally,
Scholastic
in United States
defendants,
violation
primary
Finnerty,
interpreted Wright
their
properly
District Court
dismissed
mean that a defendant “cannot
pri
incur
person”
claim for “control
under mary liability for a statement neither made
20(a)
Act;
Exchange
himby
nor attributed to him at the time of
dissemination,”
its
language which one
for leave to amend
request
Plaintiffs’
interpret
suggest
could
that strict attri
complaint is
their
denied.
necessary.
bution is
*17
Accordingly,
judgment
the
of the Dis-
(2d Cir.2008)
omitted).
(quotation marks
AFFIRMED.
trict Court is
precedent
our own
appears
While
to be
PARKER, JR.,
Judge,
B.D.
Circuit
consistent,
invariably
sibling
our
cir
concurring.
sharply
cuits have debated
whether an at
requirement
necessary
tribution
is
under
panel’s opinion
The
does an admirable
Denver, N.A.,
Central Bank
v. First
job
a
a
distilling
with
formidable
of
task—
Denver, N.A.,
Interstate Bank
511 U.S.
10(b)
theory
secondary
of Rule
of
164,
1439,
ments private plain- observes
The SEC also already bring securities claims
tiffs who they prove must significant face hurdles — falsity knew the the defendants statements, a result of the
their and as Act, Litigation Reform
Private Securities giving facts particularity
must with “state strong inference the defen-
rise to required state of
dant acted with 78u-4(b)(2). Ap- The
mind.” U.S.C. argue with some force
pellants our case Mayer Brown
against a result shields in circumstance where the damages
from misleading responsible for the
partner criminally convicted and
statements was years. term of seven prison
received Judgment, United States See Amended Collins, 1:07-cr-01170
America v. No.
(S.D.N.Y. 2010). Mar. importance
In of the exis- light of
tence, non, require- vel of an attribution laws, bar,
ment to securities industry, case could pro-
the securities this Court, as, full perhaps,
vide our as well Court, opportunity an
clarify the law this area. *18 America,
UNITED STATES
Plaintiff-Appellee,
MOSKOWITZ, & PASSMAN
EDELMAN, Defendant-
Appellant.
Docket No. 08-3017-cv. Appeals,
United Court of States
Second Circuit.
Argued: March 2010. April
Decided: