Cutting and pasting misstatements can get you nailed for securities fraud

In a decision with implications for private securities fraud suits, the United States Supreme Court recently held that an investment banker that copied and pasted misstatements from his boss into emails to prospective investors committed securities fraud, despite not being the actual “maker” of the statement, because the statement was attributed to another person. In a Legal Update “US Supreme Court expands potential liability for securities fraud,” Kevin J. Harnisch, a partner in the Washington, DC office, and Seth M. Kruglak, a partner in the New York Office, analyze Lorenzo v. Securities and Exchange Commission , which held that even though the investment banker did not make the misstatements from a securities law perspective, his act of distributing those misstatements while knowing they were false constituted participation in a fraudulent scheme.

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