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JANUS CAPITAL GROUP v. FIRST DERIVATIVE TRADERS

Docket No.: 09-525
Certiorari Granted: 06/28/10
Argued: December 7, 2010
Decided: 06/13/11

Topics:

Securities Law, fiduciary obligations, trademark

PartyNames: Janus Capital Group, Inc., et al. v. First Derivative Traders
Petitioner: Janus Capital Group, Inc., et al.
Respondent: First Derivative Traders

Court Below: United States Court of Appeals for the Fourth Circuit
Citation: 566 F.3d 111

Janus Capital Group, Inc., et al.
v.
First Derivative Traders
Background:

There is no aiding-and-abetting liability in private actions brought under Section 10(b) of the Securities Exchange Act of 1934. Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994). Thus, a service provider who provides assistance to a company that makes a public misstatement cannot be held liable in a private securities-fraud action. Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., 128 S. Ct. 761 (2008). In the decision below, however, the Fourth Circuit held that an investment adviser who allegedly "helped draft the misleading prospectuses" of a different company, ''by participating in the writing and dissemination of [those] prospectuses," can be held liable in a private action "even if the statement on its face is not directly attributed to the [adviser]." App., infra, 17a-18a, 24a (emphases added).

Question Presented:

1. Whether the Fourth Circuit erred in concluding--in direct conflict with decisions of the Fifth, Sixth, and Eighth Circuits--that a service provider can be held primarily liable in a private securities fraud action for "help[ing]" or "participating in" another company's misstatements. 2. Whether the Fourth Circuit erred in concluding--in direct conflict with decisions of the Second, Tenth, and Eleventh Circuits--that a service provider can be held primarily liable in a private securities-fraud action for statements that were not directly and contemporaneously attributed to the service provider.

Question:

Did the Fourth Circuit err in concluding that a service provider – in this case JCM – can be held liable in a private securities fraud action for "helping or participating in" another company's misstatements? Did the Fourth Circuit err in concluding that a service provider – in this case JCM – can be held liable in a private securities fraud action for statements that were not directly and contemporaneously attributable to the service provider?

JANUS CAPITAL GROUP v. FIRST DERIVATIVE TRADERS
ORAL ARGUMENT

12/07/10

Listen to Oral Argument in JANUS CAPITAL GROUP v. FIRST DERIVATIVE TRADERS
Holding: reversed
Vote: 5-4
Opinion By:
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