564 U.S. 135

JANUS CAPITAL GROUP, INC., etal. v . FIRST
DERIVATIVE TRADERS

certiorari to the united states court of appeals for the fourth circuit


No. 09525.Argued December 7, 2010Decided June 13, 2011

Respondent First Derivative Traders (First Derivative), representing a class of stockholders in petitioner Janus Capital Group, Inc. (JCG), filed this private action under Securities and Exchange Commission (SEC) Rule 10b5, which forbids any person [t]o make any untrue statement of a material fact in connection with the purchase or sale of securities. The complaint alleged, inter alia, that JCG and its wholly owned subsidiary, petitioner Janus Capital Management LLC (JCM), made false statements in mutual fund prospectuses filed by Janus Investment Fundfor which JCM was the investment adviser and administratorand that those statements affected the price of JCGs stock. Although JCG created Janus Investment Fund, it is a separate legal entity owned entirely by mutual fund investors. The District Court dismissed the complaint for failure to state a claim. The Fourth Circuit reversed, holding that First Derivative had sufficiently alleged that JCG and JCM, by participating in the writing and dissemination of the prospectuses, made the misleading statements contained in the documents. Before this Court, First Derivative continues to argue that JCM made the statements but seeks to hold JCG liable only as a control person of JCM under 20(a).

Held: Because the false statements included in the prospectuses were made by Janus Investment Fund, not by JCM, JCM and JCG cannot be held liable in a private action under Rule 10b5. Pp. 512.

(a)Although neither Rule 10b5 nor the statute it interprets, 10(b) of the Act, expressly creates a private right of action, such an action is implied under 10(b). Superintendent of Ins. of N.Y. v. Bankers Life & Casualty Co. , 404 U.S. 6, n.9. That holding remains the law, Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc. , 552 U.S. 148, but, in analyzing the question at issue, the Court is mindful that it must give narrow dimensions to a right Congress did not authorize when it first enacted the statute and did not expand when it revisited it, id., at 167. Pp. 510.

(1)For Rule 10b5 purposes, 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. Without control, a person or entity can merely suggest what to say, not make a statement in its own right. This rule follows from Central Bank of Denver, N. A. v. First Interstate Bank of Denver, N.A. , 511 U.S. 164, which held that Rule 10b5s private right of action does not include suits against aiders and abettors who contribute substantial assistance to the making of a statement but do not actually make it. Reading make more broadly, to include persons or entities lacking ultimate control over a statement, would substantially undermine Central Bank by rendering aiders and abettors almost nonexistent. The Courts interpretation is also suggested by Stoneridge, 552 U.S., at 161, and accords with the narrow scope that must be given the implied private right of action, id., at 167. Pp. 68.

(2)The Court rejects the Governments contention that make should be defined as create, thereby allowing private plaintiffs to sue a person who provides the false or misleading information that another person puts into a statement. Adopting that definition would be inconsistent with Stoneridge, supra , at 161, which rejected a private Rule 10b5 suit against companies involved in deceptive transactions, even when information about those transactions was later incorporated into false public statements. First Derivative notes the uniquely close relationship between a mutual fund and its investment adviser, but the corporate formalities were observed, and reapportionment of liability in light of this close relationship is properly the responsibility of Congress, not the courts. Furthermore, First Derivatives rule would read into Rule 10b5 a theory of liability similar tobut broader thancontrol-person liability under 20(a). Pp. 810.

(b)Although JCM may have been significantly involved in preparing the prospectuses, it did not itself make the statements at issue for Rule 10b5 purposes. Its assistance in crafting what was said was subject to Janus Investment Funds ultimate control. Pp. 1012.

566 F.3d 111, reversed.

Thomas, J., delivered the opinion of the Court, in which Roberts, C.J., and Scalia, Kennedy, and Alito, JJ., joined. Breyer, J., filed a dissenting opinion, in which Ginsburg, Sotomayor, and Kagan, JJ., joined.

JANUS CAPITAL GROUP, INC., etal. , PETITIONERS
v. FIRST DERIVATIVE TRADERS

on writ of certiorari to the united states court of appeals for the fourth circuit


[June 13, 2011]

Justice Thomas delivered the opinion of the Court.

This case requires us to determine whether Janus Capital Management LLC (JCM), a mutual fund investment adviser, can be held liable in a private action under Securities and Exchange Commission (SEC) Rule 10b5 for false statements included in its client mutual funds prospectuses. Rule 10b5 prohibits mak[ing] any untrue statement of a material fact in connection with the purchase or sale of securities. 17 CFR 240.10b5 (2010). We conclude that JCM cannot be held liable because it did not make the statements in the prospectuses.

I

Janus Capital Group, Inc. (JCG), is a publicly traded company that created the Janus family of mutual funds. These mutual funds are organized in a Massachusetts business trust, the Janus Investment Fund. Janus Investment Fund retained JCGs wholly owned subsidiary, JCM, to be its investment adviser and administrator. JCG and JCM are the petitioners here.

Although JCG created Janus Investment Fund, Janus Investment Fund is a separate legal entity owned entirely by mutual fund investors. Janus Investment Fund has no assets apart from those owned by the investors. JCM provides Janus Investment Fund with investment advisory services, which include the management and administrative services necessary for the operation of [Janus] Fun[d], App. 225a, but the two entities maintain legal independence. At all times relevant to this case, all of the officers of Janus Investment Fund were also officers of JCM, but only one member of Janus Investment Funds board of trustees was associated with JCM. This is more independence than is required: By statute, up to 60 percent of the board of a mutual fund may be composed of interested persons. See 54 Stat. 806, as amended, 15 U.S.C. 80a10(a); see also 15 U.S.C. A. 80a2(a)(19) (2009 ed. and Feb. 2011 Supp.) (defining interested person).

As the securities laws require, Janus Investment Fund issued prospectuses describing the investment strategy and operations of its mutual funds to investors. See 15 U.S.C. 77b(a)(10)(b). The prospectuses for several funds represented that the funds were not suitable for market timing and can be read to suggest that JCM would implement policies to curb the practice. 1 For example, the Janus Mercury Fund prospectus dated February 25, 2002, stated that the fund was not intended for market timing or excessive trading and represented that it may reject any purchase request if it believes that any combination of trading activity is attributable to market timing or is otherwise excessive or potentially disruptive to the Fund. App. 141a. Although market timing is legal, it harms other investors in the mutual fund.

In September 2003, the Attorney General of the State of New York filed a complaint against JCG and JCM alleging that JCG entered into secret arrangements to permit market timing in several funds run by JCM. After the complaints allegations became public, investors withdrew significant amounts of money from the Janus Investment Fund mutual funds. 2 Because Janus Investment Fund compensated JCM based on the total value of the funds and JCMs management fees comprised a significant percentage of JCGs income, Janus Investment Funds loss of value affected JCGs value as well. JCGs stock price fell nearly 25 percent, from $17.68 on September 2 to $13.50 on September 26.

Respondent First Derivative Traders (First Derivative) represents a class of plaintiffs who owned JCG stock as of September 3, 2003. Its complaint asserts claims against JCG and JCM for violations of Rule 10b5 and 10(b) of the Securities Exchange Act of 1934, 48 Stat. 891, as amended, 15 U.S.C. 78j(b). First Derivative alleges that JCG and JCM caused mutual fund prospectuses to be issued for Janus mutual funds and made them available to the investing public, which created the misleading impression that [JCG and JCM] would implement measures to curb market timing in the Janus [mutual funds]. App. to Pet. for Cert. 60a. Had the truth been known, Janus [mutual funds] would have been less attractive to investors, and consequently, [JCG] would have realized lower revenues, so [JCGs] stock would have traded at lower prices. Id. , at 72a.

First Derivative contends that JCG and JCM materially misled the investing public and that class members relied upon the integrity of the market price of [JCG] securities and market information relating to [JCG and JCM]. Id. , at 109a. The complaint also alleges that JCG should be held liable for the acts of JCM as a controlling person under 15 U.S.C. A. 78t(a) (Feb. 2011 Supp.) (20(a) of the Act).

The District Court dismissed the complaint for failure to state a claim. 3 Inre Mutual Funds Inv. Litigation , 487 F.Supp. 2d 618, 620 (D Md. 2007). The Court of Appeals for the Fourth Circuit reversed, holding that First Derivative had sufficiently alleged that JCG and JCM, by participating in the writing and dissemination of the prospectuses, made the misleading statements contained in the documents. Inre Mutual Funds Inv. Litigation , 566 F.3d 111, 121 (2009) (emphasis in original). With respect to the element of reliance, the court found that investors would infer that JCM played a role in preparing or approving the content of the Janus fund prospectuses, id. , at 127, but that investors would not infer the same about JCG, which could be liable only as a control person of JCM under 20(a). Id. , at 128, 129130.

II

We granted certiorari to address whether JCM can be held liable in a private action under Rule 10b5 for false statements included in Janus Investment Funds pro-spectuses. 561 U.S. ___ (2010). Under Rule 10b5, it is unlawful for any person, directly or indirectly, [t]o make any untrue statement of a material fact in connection with the purchase or sale of securities. 17 CFR 240.10b5(b). 4 To be liable, therefore, JCM must have made the material misstatements in the prospectuses. We hold that it did not. 5

A

The SEC promulgated Rule 10b5 pursuant to authority granted under 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b). Although neither Rule 10b5 nor 10(b) expressly creates a private right of action, this Court has held that a private right of action is implied under 10(b). Superintendent of Ins. of N.Y. v. Bankers Life & Casualty Co. , 404 U.S. 6, n.9 (1971). That holding remains the law, Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc. , 552 U.S. 148, 165 (2008) , but [c]oncerns with the judicial creation of a private cause of action caution against its expansion, ibid. Thus, in analyzing whether JCM made the statements for purposes of Rule 10b5, we are mindful that we must give narrow dimensions to a right of action Congress did not authorize when it first enacted the statute and did not expand when it revisited the law. Id., at 167.

1

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. 6 Oxford English Dictionary 66 (def. 59) (1933) (hereinafter OED); accord, Websters New International Dictionary 1485 (def. 43) (2d ed. 1934) ( Make followed by a noun with the indefinite article is often nearly equivalent to the verb intransitive corresponding to that noun). For instance, to make a proclamation is the approximate equivalent of to proclaim, and to make a promise approximates to promise. See 6 OED 66 (def. 59). The phrase at issue in Rule 10b5, [t]o make any statement, is thus the approximate equivalent of to state.

For purposes of Rule 10b5, 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. 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. And in the ordinary case, attribution within a statement or implicit from surrounding circumstances is strong evidence that a statement was made byand only bythe party to whom it is attributed. 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 creditor blamefor what is ultimately said.

This rule follows from Central Bank of Denver, N. A. v. First Interstate Bank of Denver, N. A. , 511 U.S. 164 (1994) , in which we held that Rule 10b5s private right of action does not include suits against aiders and abettors. See id. , at 180. Such suitsagainst entities that contribute substantial assistance to the making of a statement but do not actually make itmay be brought by the SEC, see 15 U.S.C.A. 78t(e), but not by private parties. A broader reading of make, including persons or entities without ultimate control over the content of a statement, would substantially undermine Central Bank . If persons or entities without control over the content of a statement could be considered primary violators who made the statement, then aiders and abettors would be almost nonexistent. 6

This interpretation is further supported by our recent decision in Stoneridge . There, investors sued entities who, acting both as customers and suppliers, agreed to arrangements that allowed the investors company to mislead its auditor and issue a misleading financial statement. 552 U.S., at 152153. We held that dismissal of the complaint was proper because the public could not have relied on the entities undisclosed deceptive acts. Id. , at 166167. Significantly, in reaching that conclusion we emphasized that nothing [the defendants] did made it necessary or inevitable for [the company] to record the transactions as it did. Id. , at 161. 7 This emphasis suggests the rule we adopt today: that the maker of a statement is the entity with authority over the content of the statement and whether and how to communicate it. Without such authority, it is not necessary or inevitable that any falsehood will be contained in the statement.

Our holding also accords with the narrow scope that we must give the implied private right of action. Id., at 167. Although the existence of the private right is now settled, we will not expand liability beyond the person or entity that ultimately has authority over a false statement.

2

The Government contends that make should be defined as create. Brief for United States as Amicus Curiae 1415 (citing Websters New International Dictionary 1485 (2d ed. 1958) (defining make as [t]o cause to exist, appear, or occur)). This definition, although perhaps appropriate when make is directed at an object unassociated with a verb ( e.g. , to make a chair), fails to capture its meaning when directed at an object expressing the action of a verb.

Adopting the Governments definition of make would also lead to results inconsistent with our precedent. The Governments definition would permit private plaintiffs to sue a person who provides the false or misleading information that another person then puts into the statement. Brief for United States as Amicus Curiae 13. 8 But in Stoneridge , we rejected a private Rule 10b5 suit against companies involved in deceptive transactions, even when information about those transactions was later incorporated into false public statements. 552 U.S., at 161. We see no reason to treat participating in the drafting of a false statement differently from engaging in deceptive transactions, when each is merely an undisclosed act preceding the decision of an independent entity to make a public statement.

For its part, First Derivative suggests that the well-recognized and uniquely close relationship between a mutual fund and its investment adviser should inform our decision. Brief for Respondent 21. It suggests that an investment adviser should generally be understood to be the maker of statements by its client mutual fund, like a playwright whose lines are delivered by an actor. We decline this invitation to disregard the corporate form. Although First Derivative and its amici persuasively argue that investment advisers exercise significant influence over their client funds, see Jones v. Harris Associates L.P. , 559 U.S. ___, ___ (2010) (slip op., at 12), it is undisputed that the corporate formalities were observed here. JCM and Janus Investment Fund remain legally separate entities, and Janus Investment Funds board of trustees was more independent than the statute requires. 15 U.S.C. 80a10. 9 Any reapportionment of liability in the securities industry in light of the close relationship between investment advisers and mutual funds is properly the responsibility of Congress and not the courts. Moreover, just as with the Governments theory, First Derivatives rule would create the broad liability that we rejected in Stoneridge .

Congress also has established liability in 20(a) for [e]very person who, directly or indirectly, controls any person liable for violations of the securities laws. 15 U.S.C.A. 78t(a). First Derivatives theory of liability based on a relationship of influence resembles the liability imposed by Congress for control. To adopt First Derivatives theory would read into Rule 10b5 a theory of liability similar tobut broader in application than, see post , at 9what Congress has already created expressly elsewhere. 10 We decline to do so.

B

Under this rule, JCM did not make any of the statements in the Janus Investment Fund prospectuses; Janus Investment Fund did. Only Janus Investment Fundnot JCMbears the statutory obligation to file the prospectuses with the SEC. 15 U.S.C. 77e(b)(2)(b); see also 17 CFR 230.497 (imposing requirements on investment companies). The SEC has recorded that Janus Investment Fund filed the prospectuses. See JIF Group1 Standalone Prospectuses (Feb. 25, 2002), online at http://www.sec.gov/Archives/edgar/data/ 277751/000027775102000049/0000277751-02-000049.txt (as visited June 10, 2011, and available in Clerk of Courts case file) (recording the Filer of the Janus Mercury Fund prospectus as Janus Investment Fund). There is no allegation that JCM in fact filed the prospectuses and falsely attributed them to Janus Investment Fund. Nor did anything on the face of the prospectuses indicate that any statements therein came from JCM rather than Janus Investment Funda legally independent entity with its own board of trustees. 11

First Derivative suggests that both JCM and Janus Investment Fund might have made the misleading statements within the meaning of Rule 10b5 because JCM was significantly involved in preparing the prospectuses. But this assistance, subject to the ultimate control of Janus Investment Fund, does not mean that JCM made any statements in the prospectuses. Although JCM, like a speechwriter, may have assisted Janus Investment Fund with crafting what Janus Investment Fund said in the prospectuses, JCM itself did not make those statements for purposes of Rule 10b5. 12

***

The statements in the Janus Investment Fund prospectuses were made by Janus Investment Fund, not by JCM. Accordingly, First Derivative has not stated a claim against JCM under Rule 10b5. The judgment of the United States Court of Appeals for the Fourth Circuit is reversed.

It is so ordered.


Notes

1 Market timing is a trading strategy that exploits time delay in mutual funds daily valuation system. The price for buying or selling shares of a mutual fund is ordinarily determined by the next net asset value (NAV) calculation after the order is placed. The NAV calculation usually happens once a day, at the close of the major U.S. markets. Because of certain time delays, however, the values used in these calculations do not always accurately reflect the true value of the underlying assets. For example, a fund may value its foreign securities based on the price at the close of the foreign market, which may have occurred several hours before the calculation. But events might have taken place after the close of the foreign market that could be expected to affect their price. If the event were expected to increase the price of the foreign securities, a market-timing investor could buy shares of a mutual fund at the artificially low NAV and sell the next day when the NAV corrects itself upward. See Disclosure Regarding Market Timing and Selective Disclosure of Portfolio Holdings, 68 Fed. Reg. 70402 (proposed Dec. 17, 2003).

2 In 2004, JCG and JCM settled these allegations and agreed to reduce their fees by $125 million and pay $50 million in civil penalties and $50 million in disgorgement to the mutual fund investors.

3 The elements of a private action under Rule 10b5 are (1)a material misrepresentation or omission by the defendant; (2)scienter; (3)a connection between the misrepresentation or omission and the purchase or sale of a security; (4)reliance upon the misrepresentation or omission; (5)economic loss; and (6)loss causation. Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 157 (2008) .

4 Rule 10b5 makes it unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, [t]o make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading . 17 CFR 240.10b5(b).

5 Although First Derivative argued below that JCG violated Rule 10b5 by making the statements in the prospectuses, it now seeks to hold JCG liable solely as a control person of JCM under 20(a). The only question we must answer, therefore, is whether JCM made the misstatements. Whether First Derivative has stated a claim against JCG as a control person depends on whether it has stated a claim against JCM.

6 The dissent correctly notes that Central Bank involved secondary, not primary, liability. Post, at 4 (opinion of Breyer, J.). But for Central Bank to have any meaning, there must be some distinction between those who are primarily liable (and thus may be pursued in private suits) and those who are secondarily liable (and thus may not be pursued in private suits). We draw a clean line between the twothe maker is the person or entity with ultimate authority over a statement and others are not. In contrast, the dissents only limit on primary liability is not much of a limit at all. It would allow for primary liability whenever [t]he specific relationships alleged warrant [that] conclusionwhatever that may mean. Post, at 11.

7 We agree that no one in Stoneridge contended that the equipment suppliers were, in fact, the makers of the cable companys misstatements. Post, at 8. If Stoneridge had addressed whether the equipment suppliers were makers, todays decision would be unnecessary. The point is that Stoneridges analysis suggests that they were not.

8 Because we do not find the meaning of make in Rule 10b5 to be ambiguous, we need not consider the Governments assertion that we should defer to the SECs interpretation of the word elsewhere. Brief for United States as Amicus Curiae 13 (citing Brief for SEC as Amicus Curiae in Pacific Inv. Mgmt. Co. LLC v. Mayer Brown LLP, No. 091619 (CA2), p. 7); see Christensen v. Harris County, 529 U.S. 576, 588 (2000) . We note, however, that we have previously expressed skepticism over the degree to which the SEC should receive deference regarding the private right of action. See Piper v. Chris-Craft Industries, Inc., 430 U.S. 1, 41, n. 27 (1977) (noting that the SECs presumed expertise is of limited value when analyzing whether a cause of action should be implied by judicial interpretation in favor of a particular class of litigants). This also is not the first time this Court has disagreed with the SECs broad view of 10(b) or Rule 10b5. See, e.g., Central Bank of Denver, N. A. v. First Interstate Bank of Denver, N. A., 511 U.S. 164, 188191 (1994) ; Dirks v. SEC, 463 U.S. 646, 666, n. 27 (1983) ; Ernst & Ernst v. Hochfelder, 425 U.S. 185, 207 (1976) ; Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 746, n. 10 (1975) .

9 Nor does First Derivative contend that any statements made by JCM to Janus Investment Fund were public statements for the purposes of Basic Inc. v. Levinson, 485 U.S. 224, 227228 (1988) . We do not address whether and in what circumstances statements would qualify as public. Cf. post, at 1213 (citing cases involving liability for statements made to analysts); Inre Aetna, Inc. Securities Litigation, 617 F.3d 272, 275277 (CA3 2010) (involving allegations that defendants publicly tout[ed] falsities on analyst conference calls).

10 We do not address whether Congress created liability for entities that act through innocent intermediaries in 15 U.S.C. A. 78t(b). See Tr. of Oral Arg. 6, 61.

11 First Derivative suggests that indirectly in Rule 10b5 may broaden the meaning of make. We disagree. The phrase directly or indirectly is set off by itself in Rule 10b5 and modifies not just to make, but also to employ and to engage. We think the phrase merely clarifies that as long as a statement is made, it does not matter whether the statement was communicated directly or indirectly to the recipient. A different understanding of indirectly would, like a broad definition of make, threaten to erase the line between primary violators and aiders and abettors established by Central Bank. In this case, we need not define precisely what it means to communicate a made statement indirectly because none of the statements in the prospectuses were attributed, explicitly or implicitly, to JCM. Without attribution, there is no indication that Janus Investment Fund was quoting or otherwise repeating a statement originally made by JCM. Cf. Anixter v. Home-Stake Production Co., 77 F.3d 1215, 1220, and n. 4 (CA10 1996) (quoting a signed Auditors Report included in a pro-spectus); Basic, supra, at 227, n. 4 (quoting a news item reporting a state-ment by Basics president). More may be required to find that a person or entity made a statement indirectly, but attribution is necessary.

12 That JCM provided access to Janus Investment Funds prospectuses on its Web site is also not a basis for liability. Merely hosting a document on a Web site does not indicate that the hosting entity adopts the document as its own statement or exercises control over its content. Cf. United States v. Ware, 577 F.3d 442, 448 (CA2 2009) (involving the issuance of false press releases through innocent companies). In doing so, we do not think JCM made any of the statements in Janus Investment Funds prospectuses for purposes of Rule 10b5 liability, just as we do not think that the SEC makes the statements in the many prospectuses available on its Web site.

JANUS CAPITAL GROUP, INC., etal. , PETITIONERS
v. FIRST DERIVATIVE TRADERS

on writ of certiorari to the united states court of appeals for the fourth circuit


[June 13, 2011]

Justice Breyer , with whom Justice Ginsburg, Justice Sotomayor, and Justice Kagan join, dissenting.

This case involves a private Securities and Exchange Commission (SEC) Rule 10b5 action brought by a group of investors against Janus Capital Group, Inc., and Janus Capital Management LLC (Janus Management), a firm that acted as an investment adviser to a family of mutual funds (collectively, the Janus Fund or Fund). The investors claim that Janus Management knowingly made materially false or misleading statements that appeared in prospectuses issued by the Janus Fund. They say that they relied upon those statements, and that they suffered resulting economic harm.

Janus Management and the Janus Fund are closely related. Each of the Funds officers is a Janus Management employee. Janus Management, acting through those employees (and other of its employees), manages the purchase, sale, redemption, and distribution of the Funds investments. Janus Management prepares, modifies, and implements the Janus Funds long-term strategies. And Janus Management, acting through those employees, carries out the Funds daily activities.

Rule 10b5 says in relevant part that it is unlawful for any person, directly or indirectly [t]o make any untrue statement of a material fact in connection with the purchase or sale of securities. 17 CFR 240.10b5(b) (2010) (emphasis added). See also 15 U.S.C. 78j(b) (10(b) of the Securities Exchange Act of 1934). The specific legal question before us is whether Janus Management can be held responsible under the Rule for having ma[d]e certain false statements about the Janus Funds activities. The statements in question appear in the Janus Funds prospectuses.

The Court holds that only the Janus Fund, not Janus Management, could have ma[d]e those statements. The majority points out that the Janus Funds board of trustees has ultimate authority over the content of the statements in a Fund prospectus. And in the majoritys view, only the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it can make a statement within the terms of Rule 10b5. Ante , at 6.

In my view, however, the majority has incorrectly interpreted the Rules word make. Neither common English nor this Courts earlier cases limit the scope of that word to those with ultimate authority over a statements content. To the contrary, both language and case law indicate that, depending upon the circumstances, a management company, a board of trustees, individual company officers, or others, separately or together, might make statements contained in a firms prospectuseven if a board of directors has ultimate content-related responsibility. And the circumstances here are such that a court could find that Janus Management made the statements in question.

I

Respondents complaint sets forth the basic elements of a typical Rule 10b5 fraud on the market claim. It alleges that Janus Management made statements that created the misleading impression that it would implement measures to curb a trading strategy called market timing. Second Amended Complaint 6 (here- inafter Complaint), App. to Pet. for Cert. 60a. The complaint adds that Janus Management knew that these market timing statements were false; that the statements were material; that the market, in pricing securities (including related securities) relied upon the statements; that as a result, when the truth came out (that Janus Management indeed permitted market timing in the Janus Fund), the price of relevant shares fell; and the false statements thereby caused respondent significant economic losses. Complaint 410, id. , at 60a63a. Cf. Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc. , 552 U.S. 148, 157 (2008) (identi-fying the elements of a typical 10(b) private action).

The majority finds the complaint fatally flawed, however, because (1) Rule 10b5 says that no person shall directly or indirectly make any untrue statement of a material fact, (2) the statements at issue appeared in the Janus Funds prospectuses, and (3) only the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it can make a false statement. Ante , at 23, 56.

But where can the majority find legal support for the rule that it enunciates? The English language does not impose upon the word make boundaries of the kind the majority finds determinative. Every day, hosts of corporate officials make statements with content that more senior officials or the board of directors have ultimate authority to control. So do cabinet officials make statements about matters that the Constitution places within the ultimate authority of the President. So do thousands, perhaps millions, of other employees make statements that, as to content, form, or timing, are subject to the control of another.

Nothing in the English language prevents one from saying that several different individuals, separately or together, make a statement that each has a hand in producing. For example, as a matter of English, one can say that a national political party has made a statement even if the only written communication consists of uniform press releases issued in the name of local party branches; one can say that one foreign nation has made a statement even when the officials of a different nation (subject to its influence) speak about the matter; and one can say that the President has made a statement even if his press officer issues a communication, sometimes in the press officers own name. Practical matters related to context, including control, participation, and relevant audience, help determine who makes a statement and to whom that statement may properly be attributed, see ante , at 11, n.11at least as far as ordinary English is concerned.

Neither can the majority find support in any relevant precedent. The majority says that its rule follows from Central Bank of Denver, N. A. v. First Interstate Bank of Denver, N. A. , 511 U.S. 164 (1994) , in which the Court held that Rule 10b5s private right of action does not include suits against aiders and abettors. Ante , at 7. But Central Bank concerns a different matter. And it no more requires the majoritys rule than free air travel for small children requires free air travel for adults.

Central Bank is a case about secondary liability, liability attaching, not to an individual making a false statement, but to an individual helping someone else do so. Central Bank involved a bond issuer accused of having made materially false statements, which overstated the values of property that backed the bonds. Central Bank also involved a defendant that was a bank, serving as indenture trustee, which was supposed to check the bond issuers valuations. The plaintiffs claimed that the bank delayed its valuation checks and thereby helped the issuer make its false statements credible. The question before the Court concerned the banks liabilitya secondary liability for aiding and abetting the bond issuer, who (on the theory set forth) was primarily liable.

The Court made this clear. The question presented was whether private civil liability under 10(b) extends to those who do not engage in the manipulative or deceptive practice , but who aid and abet the violation. 511 U.S., at 167 (emphasis added). The Court wrote that aiding and abetting liability reaches persons who do not engage in the proscribed activities at all , but who give a degree of aid to those who do. Id., at 176 (emphasis added). The Court described civil law aiding and abetting as know[ing] that the others conduct constitutes a breach of duty and giv[ing] substantial assistance or encouragement to the other . Id., at 181 (quoting Restatement (Second) of Torts 876(b) (1977); emphasis added). And it reviewed a Court of Appeals decision that had defined the elements of aiding and abetting as (1) a primary violation of 10(b); (2) recklessness by the aider and abettor as to the existence of the primary violation; and (3) substantial assistance given to the primary violator by the aider and abettor. 511 U.S., at 168 (emphasis added). Faced with this question, the Court answered that 10(b) and Rule 10b5 do not provide for this kind of aiding and abetting liability in private suits.

By way of contrast, the present case is about primary liabilityabout individuals who allegedly themselves make materially false statements, not about those who help others to do so. The question is whether Janus Management is primarily liable for violating the Act, not whether it simply helped others violate the Act. The Central Bank defendant concededly did not make the false statements in question (others did), while here the defendants allegedly did make those statements. And a rule (the majoritys rule) absolving those who allegedly did make false statements does not follow from a rule ( Central Bank s rule) absolving those who concededly did not do so.

The majority adds that to interpret the word make as including those without ultimate control over the content of a statement would substantially undermine Central Bank s holding. Ante , at 7. Would it? The Court in Central Bank specifically wrote that its holding did

not mean that secondary actors in the securities markets are always free from liability under the securities Acts. Any person or entity, including a lawyer, accountant, or bank, who employs a manipulative device or makes a material misstatement (or omission) on which a purchaser or seller of securities relies may be liable as a primary violator under 10b5, assuming all of the requirements for primary liability under Rule 10b5 are met. 511 U.S., at 191 (some emphasis added).

Thus, as far as Central Bank is concerned, depending upon the circumstances, board members, senior firm officials, officials tasked to develop a marketing document, large investors, or others (taken together or separately) all might make materially false statements subjecting themselves to primary liability. The majoritys rule does not protect, it extends , Central Bank s holding of no-liability into new territory that Central Bank explicitly placed outside that holding. And by ignoring the language in which Central Bank did so, the majoritys rule itself undermines Central Bank . Where is the legal support for the majoritys draw[ing] a clean line, ante , at 7, n. 6, that so seriously conflicts with Central Bank? Indeed, where is the legal support for the majoritys suggestion that plaintiffs must show some kind of attribution of a statement to a defendant, ante , at 11, n. 11if it means plaintiffs must show, not only that the defendant ma[d]e the statement, but something more?

The majority also refers to Stoneridge, but that case offers it no help. In Stoneridge , firms that supplied electronic equipment to a cable television company agreed with the cable television company to enter into a series of fraudulent sales and purchases, for example, a sale at an unusually high price, thereby providing funds which the suppliers would use to buy advertising from the cable television company. These arrangements enabled the cable television company to fool its accountants (and ultimately the public) into believing that it had more revenue (for example, advertising revenue) than it really had. As part of the agreement, the companies exchanged letters and backdated contracts to conceal the fraud. Investors subsequently sued the cable television company, some of its officers, its auditors, and the equipment suppliers, as well, claiming that all of them had engaged in a scheme to defraud securities purchasers. In respect to most of the defendants, investors identified allegedly materially false statements contained in the cable television companys financial statements or similar docu- ments. But in respect to the equipment suppliers, in-vestors claimed that the relevant deceptive conduct was in the letters, backdated contracts, and related oral conversations about the scheme. The investors argued that the equipment suppliers, by participating in the transactions, violated 10(b) and Rule 10b5. Stoneridge , 552 U.S., at 155.

The Court held that the equipment suppliers could not be found liable for securities fraud in a private suit under 10(b). But in doing so, it did not deny that the equipment suppliers had made the false statements contained in the letters, contracts, and conversations. See id., at 158159. Rather, the Court said the issue in the case was whether any deceptive statement or act respondents made was not actionable because it did not have the requisite proximate relation to the investors harm. Ibid. (emphasis added). And it held that these deceptive statements or actions could not provide a basis for liability because the investors could not prove sufficient reliance upon the particular false statements that the equipment suppliers had made.

The Court pointed out that the equipment suppliers had no duty to disclose; and their deceptive acts were not communicated to the public. Id., at 159. And the Court went on to say that as a result, the investors cannot show reliance upon any of the equipment suppliers actions, except in an indirect chain that we find too remote for liability. Ibid. The Court concluded,

[the equipment suppliers] deceptive acts, which were not disclosed to the investing public, are too remote to satisfy the requirement of reliance. It was [the cable company], not [the equipment suppliers], that misled its auditor and filed fraudulent financial statements; nothing [the equipment suppliers] did made it necessary or inevitable for [the cable company] to record the transactions as it did. Id., at 161.

Insofar as the equipment suppliers conduct was at issue, the fraudulent arrangement took place in the marketplace for goods and services, not in the investment sphere. Id., at 166.

It is difficult for me to see how Stoneridge support[s] the majoritys rule. Ante , at 7. No one in Stoneridge disputed the making of the relevant statements, the fraudulent contracts and the like. And no one in Stoneridge contended that the equipment suppliers were, in fact, the makers of the cable companys misstatements. Rather, Stoneridge was concerned with whether the equipment suppliers separate statements were sufficiently disclosed in the securities marketplace so as to be the basis for investor reliance. They were not. But this is a different inquiry than whether statements acknowledged to have been disclosed in the securities marketplace and ripe for reliance can be said to have been ma[d]e by one or another actor. How then does Stoneridge support the majoritys new rule?

The majority adds that its rule is necessary to avoid a theory of liability similar tobut broader in application than20(a)s liability, for [e]very person who, directly or indirectly, controls any person liable for violations of the securities laws. Ante , at 10 (quoting 15 U.S.C.A. 78t(a) (Feb. 2011 Supp.)). But that is not so. This Court has explained that the possibility of an express remedy under the securities laws does not preclude a claim under 10(b). Herman & MacLean v. Huddleston , 459 U.S. 375, 388 (1983) .

More importantly, a person who is liable under 20(a) controls another person who is liable for a securities violation. Morrison v. National Australia Bank Ltd. , 561 U.S. ___, ___, n. 2 (2010) (slip op., at 3, n.2) (Liability under 20(a) is obviously derivative of liability under some other provision of the Exchange Act). We here examine whether a person is primarily liable whether they do, or they do not, control another person who is liable . That is to say, here, the liability of some other person is not at issue.

And there is at least one significant category of cases that 10(b) may address that derivative forms of liability, such as under 20(a), cannot, namely, cases in which one actor exploits another as an innocent intermediary for its misstatements. Here, it may well be that the Funds board of trustees knew nothing about the falsity of the prospectuses. See, e.g., In re Lammert , Release No. 348, 93 S. E. C. Docket 5676, 5700 (2008) (Janus Management was aware of market timing in the Janus Fund no later than 2002, but [t]his knowledge was never shared with the Board). And if so, 20(a) would not apply.

The possibility of guilty management and innocent board is the 13th stroke of the new rules clock. What is to happen when guilty management writes a prospectus (for the board) containing materially false statements and fools both board and public into believing they are true? Apparently under the majoritys rule, in such circum- stances no one could be found to have ma[d]e a ma- terially false statementeven though under the common law the managers would likely have been guilty or liable (in analogous circumstances) for doing so as principals (and not as aiders and abettors). See, e.g., 2 W. LaFave, Substantive Criminal Law 13.1(a) (2d ed. 2003); 1 M. Hale, Pleas of the Crown 617 (1736); Perkins, Parties to Crime, 89 U.Pa. L.Rev. 581, 583 (1941) (one is guilty as a principal when one uses an innocent third party to commit a crime); Restatement (Second) of Torts 533 (1976). Cf. United States v. Giles , 300 U.S. 41, 4849 (1937) .

Indeed, under the majoritys rule it seems unlikely that the SEC itself in such circumstances could exercise the authority Congress has granted it to pursue primary violators who make false statements or the authority that Congress has specifically provided to prosecute aiders and abettors to securities violations. See 104, 109 Stat. 757 (codified at 15 U.S.C.A. 78t(e) (Feb. 2011 Supp.)) (granting SEC authority to prosecute aiders and abettors). That is because the managers, not having ma[d]e the statement, would not be liable as principals and there would be no other primary violator they might have tried to aid or abet. Ibid.; SEC v. DiBella , 587 F.3d 553, 566 (CA2 2009) (prosecution for aiding and abet- ting requires primary violation to which offender gave substantial assistance (internal quotation marks omitted)).

If the majority believes, as its footnote hints, that 20(b) could provide a basis for liability in this case, ante, at 10, n.10, then it should remand the case for possible amendment of the complaint. There is a dearth of authority construing Section 20(b), which has been thought largely superfluous in 10b5 cases. 5B A. Jacobs, Disclosure and Remedies Under the Securities Law 118, p.1172 (2011). Hence respondent, who reasonably thought that it referred to the proper securities law provision, is faultless for failing to mention 20(b) as well.

In sum, I can find nothing in 10(b) or in Rule 10b5, its language, its history, or in precedent suggesting that Congress, in enacting the securities laws, intended a loophole of the kind that the majoritys rule may well create.

II

Rejecting the majoritys rule, of course, does not decide the question before us. We must still determine whether, in light of the complaints allegations, Janus Management could have ma[d]e the false statements in the prospectuses at issue. In my view, the answer to this question is Yes. The specific relationships alleged among Janus Management, the Janus Fund, and the prospectus statements warrant the conclusion that Janus Management did make those statements.

In part, my conclusion reflects the fact that this Court and lower courts have made clear that at least sometimes corporate officials and others can be held liable under Rule 10b5 for having ma[d]e a materially false statement even when that statement appears in a document (or is made by a third person) that the officials do not legally control. In Herman & MacLean , for example, this Court pointed out that certain individuals who play a part in preparing the registration statement, including corporate officers, lawyers, and accountants, may be primarily liable even where they are not named as having prepared or certified the registration statement. 459 U.S., at 386, n. 22. And as I have already pointed out, this Court wrote in Central Bank that a lawyer, accountant, or bank, who makes a material misstatement (or omission) on which a purchaser or seller of securities relies may be liable as a primary violator under 10b5 , assuming all of the requirements for primary liability under Rule 10b5 are met. 511 U.S., at 191 (some emphasis added).

Given the statements in our opinions, it is not surprising that lower courts have found primary liability for actors without ultimate authority over issued statements. One court, for example, concluded that an accountant could be primarily liable for having ma[d]e false statements, where he issued fraudulent opinion and certification letters reproduced in prospectuses, annual reports, and other corporate materials for which he was not ultimately responsible. Anixter v. Home-Stake Production Co. , 77 F.3d 1215, 12251227 (CA10 1996). In a later case postdating Stoneridge , that court reaffirmed that an outside consultant could be primarily liable for having ma[d]e false statements, where he drafted fraudulent quarterly and annual filing statements later reviewed and certified by the firms auditor, officers, and counsel. SEC v. Wolfson , 539 F. 3d 1249, 1261 (CA10 2008). And another court found that a corporations chief financial officer could be held primarily liable as having ma[d]e misstatements that appeared in a form 10K that she prepared but did not sign or file. McConville v. SEC , 465 F. 3d 780, 787 (CA7 2006).

One can also easily find lower court cases explaining that corporate officials may be liable for having ma[d]e false statements where those officials use innocent persons as conduits through which the false statements reach the public (without necessarily attributing the false statements to the officials). See, e.g., Inre Navarre Corp. Securities Litigation , 299 F.3d 735, 743 (CA8 2002) (liability may be premised on use of analysts as a conduit to communicate false statements to market); Inre Cabletron Systems, Inc. , 311 F.3d 11, 38 (CA1 2002) (rejecting a test requiring legal control over third parties making statements as giving company officials too much leeway to commit fraud on the market by using analysts as their mouthpieces (internal quotation marks omitted)); Novak v. Kasaks , 216 F.3d 300, 314315 (CA2 2000); Cooper v. Pickett , 137 F.3d 616, 624 (CA9 1997); Freeland v. Iridium World Communications, Ltd. , 545 F.Supp. 2d 59, 7576 (DC 2008).

My conclusion also reflects the particular circumstances that the complaint alleges. The complaint states that Janus Management, as investment advisor to the funds, is responsible for the day-to-day management of its investment portfolio and other business affairs of the funds. Janus Management furnishes advice and recom-mendations concerning the funds investments, as well as administrative, compliance and accounting services for the funds. Complaint 18, App. to Pet. for Cert. 65a. Each of the Funds 17 officers was a vice president of Janus Management. App. 250a258a. The Fund has no assets separate and apart from those they hold for shareholders. In re Mutual Funds Inv. Litigation , 384 F. Supp. 2d 845, 853, n. 3 (Md. 2005). Janus Management disseminated the fund prospectuses through its parent companys Web site. Complaint 38, App. to Pet. for Cert. 72a. Janus Management employees drafted and reviewed the Fund prospectuses, including language about market timing. Complaint 31, id. , at 69a; In re Mutual Funds Inv. Litigation , 590 F. Supp. 2d 741, 747 (Md. 2008). And Janus Management may well have kept the trustees in the dark about the true market timing facts. Complaint 51, App. to Pet. for Cert. 80a; In re Lammert , 93 S.E.C. Docket, at 5700.

Given these circumstances, as long as some managers, sometimes, can be held to have ma[d]e a materially false statement, Janus Management can be held to have done so on the facts alleged here. The relationship between Janus Management and the Fund could hardly have been closer. Janus Managements involvement in preparing and writing the relevant statements could hardly have been greater. And there is a serious suggestion that the board itself knew little or nothing about the falsity of what was said. See supra , at 9, 13. Unless we adopt a formal rule (as the majority here has done) that would arbitrarily exclude from the scope of the word make those who manage a firmeven when those managers perpetrate a fraud through an unknowing intermediarythe man- agement company at issue here falls within that scope. We should hold the allegations in the complaint in this respect legally sufficient.

With respect, I dissent.