Scheme Liability After Lorenzo

Non-Makers Under Rules 10b-5(a) and (c): From Lorenzo to Carchedi

Lorenzo gives non-makers no exit: "Dissemination of false or misleading statements with intent to defraud can fall within the scope of Rules 10b-5(a) and (c), as well as the relevant statutory provisions, even if the disseminator did not ‘make’ the statements and consequently falls outside Rule 10b-5(b)." The Court drew the boundary itself — "the line the Court adopts today is clear: Those who disseminate false statements with intent to defraud are primarily liable under Rules 10b-5(a) and (c), §10(b), and §17(a)(1), even if they are secondarily liable under Rule 10b-5(b)." Janus keeps its job policing subsection (b), where the "maker" is "the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it," but it now precludes liability only "where an individual neither makes nor disseminates false information—provided, of course, that the individual is not involved in some other form of fraud" Lorenzo v. SEC. & Exch. Comm’n, 587 U.S. 71 (2019).

The Second Circuit answered the obvious next question — how much of a misstatement case can be re-pled as a scheme. SEC v. Rio Tinto, No. 21-2042-cv (2d Cir. Jul 15, 2022) held that "Until further guidance from the Supreme Court (or in banc consideration here), Lentell binds: misstatements and omissions can form part of a scheme liability claim, but an actionable scheme liability claim also requires something beyond misstatements and omissions, such as dissemination." The court warned that "[a]n overreading of Lorenzo might allow private litigants to repackage their misstatement claims as scheme liability claims to ‘evade the pleading requirements imposed in misrepresentation cases,’" and that "a widened scope of scheme liability would defeat the congressional limitation on the enforcement of secondary liability, multiply the number of defendants subject to private securities actions, and render the statutory provision for secondary liability superfluous." Nor is the limit reserved for private suits: "We reject the SEC’s argument that Lentell applies only in cases brought by private litigants."

The newest application shows the framework sorting conduct defendant by defendant. Securities and Exchange Commission v. Carchedi, No. 1:25-cv-10599 (D. Mass. Mar 24, 2026) agreed with Rio Tinto that "misstatements and omissions alone are not enough for scheme liability" — "‘something extra’ — of which ‘dissemination is one example,’ per Lorenzo — is required," and "scheme liability cannot be premised solely on drafting a misstatement" because that "would permit the SEC to circumvent Janus entirely." Two pharma executives cleared the bar: the SEC "plausibly alleges that Carchedi deceived the Board into allowing the filing of the NDA and thereby attracting investment," and sending a licensor FDA meeting minutes from which they had "redacted all ‘negative information’" was "conduct [that] plausibly constitutes a fraudulent scheme and act geared toward retaining the license for dovitinib, filing the NDA, and attracting investment." A third officer who was merely "copied on a single email" transmitting the redacted minutes did not — that allegation was "too ‘tangential[]’ to give rise to such liability," and the scheme claims against her were dismissed.

The working taxonomy is now stable across circuits. Drafting a falsehood, without more, is a subsection (b) claim that lives or dies on Janus’s ultimate-authority test. Sending it to investors — or deceiving a board, auditor, or business partner in a way that ultimately misleads investors — supplies the extra conduct that Rules 10b-5(a) and (c) require. And peripheral acts like being copied on someone else’s transmission support neither theory, so expect courts to run the analysis separately for every defendant and every alleged act.