Janus Capital Group, Inc., et al., Petitioners v. First Derivative Traders (564 U.S. 135)
U.S. Supreme Court · decided June 13, 2011 · Supreme Court Database (Spaeth)
- Citation
- 564 U.S. 135 · 131 S. Ct. 2296
- Decided
- June 13, 2011
- Term
- October Term 2010
- Vote
- 5–4
- Majority author
- Justice Thomas
- Issue area
- Economic Activity
- Disposition
- Reversed
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
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 hable in a private action under Securities and Exchange Commission (SEC) Rule 10b-5 for false statements included in its client mutual funds’ prospectuses. Rule 10b-5 prohibits “mak[ing] any untrue statement of a material fact” in connection with the purchase or sale of securities. 17 CFR §240.10b-5 (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 JCG’s 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…
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