Supreme Court backs SEC, rules against investment banker

Supreme Court backs SEC, rules against investment banker
Banker held liable for taking part in scheme to defraud investors.
MAR 27, 2019
By  Bloomberg

The U.S. Supreme Court reinforced the Securities and Exchange Commission's powers, upholding sanctions against an investment banker found to have duped investors about a startup company's financial condition. The justices, voting 6-2, said Francis V. Lorenzo, who worked at Charles Vista, could be held liable for taking part in a scheme to defraud investors even if he didn't write two deceptive emails at the center of the case. (More:Financial literacy: An epic fail in America) The ruling, which upholds a federal appeals court, halts a trend of Supreme Court rulings that had trimmed the SEC's authority. The decision also bolsters the rights of private investors, giving them more power to press lawsuits claiming deception. "Congress intended to root out all manner of fraud in the securities industry," Justice Stephen Breyer wrote for the majority. "And it gave to the commission the tools to accomplish that job." Justices Clarence Thomas and Neil Gorsuch dissented. Writing for the two, Mr. Thomas said that Mr. Lorenzo "might have assisted in a scheme, but he did not himself plan, scheme, design or strategize." Such a person still could be held liable for aiding and abetting, Mr. Thomas wrote. Justice Brett Kavanaugh didn't take part in the case because he had participated in it as an appeals court judge. (More:SEC orders new enforcement hearings as a result of Supreme Court ruling) Mr. Lorenzo contended he couldn't be held liable because he had merely forwarded deceptive emails written by his boss. The emails misrepresented the financial health of a client, Waste2Energy Holdings Inc., which was failing in its efforts to develop a way to generate electricity from solid waste. An in-house SEC judge said the emails were "staggering" in their falsity.

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.