SECURITIES LITIGATION | 2026-09-30

Scheme Liability After Lorenzo v. SEC: Disseminating a Lie You Did Not “Make”

A person who did not author a false statement can still be liable under the scheme-and-fraud provisions of Rule 10b-5 for knowingly disseminating it — a doctrine the Supreme Court confirmed in Lorenzo.

Rule 10b-5 is not one prohibition but three. Subsection (b) forbids making an untrue statement of material fact; subsections (a) and (c) forbid schemes, devices, and acts, practices, or courses of business that operate as a fraud. F

Who is a primary violator of the securities-fraud rule when a false statement passes through many hands? Lorenzo answered a crucial piece of that question.

The Three Parts of Rule 10b-5

Rule 10b-5 makes it unlawful, in connection with the purchase or sale of a security:

(a) to employ any device, scheme, or artifice to defraud;
(b) to make any untrue statement of a material fact or omit a material fact necessary to make statements not misleading; and
(c) to engage in any act, practice, or course of business that operates as a fraud or deceit.

Subsection (b) is the classic misstatement provision. Subsections (a) and (c) are the scheme provisions, aimed at fraudulent conduct beyond pure words.

Janus and the “Maker” Limitation

In Janus Capital Group v. First Derivative Traders, the Supreme Court held that, for purposes of subsection (b), the “maker” of a statement is the person with ultimate authority over it — its content and whether and how to communicate it. One who merely prepares or assists in another’s statement is not the maker. Janus therefore shielded some participants from misstatement liability under (b). The open question was whether those same participants could still be reached under the scheme provisions.

Lorenzo v. SEC

In Lorenzo, an investment banker sent emails to investors containing statements he knew were false, at the direction of his boss. He argued that, because he was not the “maker” of the statements under Janus, he could not be primarily liable — and that treating dissemination as a scheme violation would collapse the distinction between (b) and the scheme provisions. The Supreme Court disagreed. It held that knowingly disseminating false statements to prospective investors falls within the scheme-and-fraud language of subsections (a) and (c), even if the disseminator did not “make” the statements under Janus. The scheme provisions, the Court reasoned, are worded broadly and can capture conduct that also involves a misstatement.

What Lorenzo Means in Practice

Dissemination is enough. A person who knowingly transmits a false statement to investors can be primarily liable under (a)/(c), regardless of who authored it.
Janus is narrowed in effect. While Janus still limits who “makes” a statement under (b), it no longer provides blanket protection from primary liability, because the scheme provisions remain available.
Scienter still required. Lorenzo involved a defendant who knew the statements were false. The scheme provisions still require the requisite state of mind; innocent or merely negligent forwarding is a different matter.

Limits and Open Questions

Lorenzo did not hold that every misstatement automatically becomes a scheme claim, and the Court acknowledged that its holding might not reach someone with a merely tangential role. Courts continue to work out where ordinary misstatement conduct ends and scheme conduct begins, and whether purely verbal conduct with no additional deceptive acts can support a scheme claim in the private-action context. The interaction with the prohibition on private aiding-and-abetting liability (which only the SEC may pursue) also remains a live issue at the margins.

Why the Distinction Matters

The line between primary and secondary liability is decisive in private litigation: private plaintiffs may sue primary violators but not aiders and abettors. By confirming that knowing dissemination is primary scheme conduct, Lorenzo expands the universe of defendants a private plaintiff (or the SEC) can pursue directly — a significant consideration for brokers, advisers, and corporate personnel who handle communications to investors.

Frequently Asked Questions

What is scheme liability?

Liability under Rule 10b-5(a) and (c) for employing a device or scheme to defraud, or engaging in an act or practice that operates as a fraud — conduct beyond simply “making” a false statement.

What did Lorenzo hold?

That knowingly disseminating false statements to investors violates the scheme provisions of Rule 10b-5, even if the disseminator was not the “maker” of the statements under Janus.

What was the Janus rule?

That the “maker” of a statement under subsection (b) is the person with ultimate authority over it; one who merely assists is not the maker.

Does Lorenzo require intent?

Yes — the defendant in Lorenzo knew the statements were false; the scheme provisions require the requisite scienter.

Why does primary versus secondary liability matter?

Because private plaintiffs can sue primary violators but not aiders and abettors; Lorenzo expands who is a primary violator.

Are there limits to Lorenzo?

Yes — the Court suggested it may not reach someone with only a tangential role, and courts continue to define the boundary between misstatement and scheme conduct.

Related Securities & Governance Guides

Talk to a Securities Attorney About Scheme Liability

If you disseminated — or received — statements now alleged to be false, scheme liability under Lorenzo may be in play. Trembach Law Firm advises California market participants on Rule 10b-5 exposure. Call (818) 514-7680.

Contact Trembach Law Firm at (818) 514-7680 for a confidential consultation.

Trembach Law Firm | 27001 Agoura Road, Suite 350, Calabasas, CA 91301