What Janus Meant: The First Wave of Court Decisions Interpreting the Supreme Courts Ultimate Authority Test in Securities Cases
By The Securities Litigation and Enforcement Group
The Supreme Court's holding in Janus v. First Derivative Traders in June 2011 appeared straightforward no primary liability except for those who actually have ultimate authority or control over the content and dissemination of a statement. The decision has already had a major impact. In the six months since Janus was decided, courts have applied its rule in cases involving related corporate entities, corporate officers, and major shareholders. Yet just how high the pleading and proof bar has been set outside the mutual fund and investment advisor context remains an open question. Different federal courts even within the same district have come to different conclusions. Until higher courts rule on the scope of Janus, the uncertainty created by these differing lower court decisions could blur the Janus bright line rule. And plaintiffs have begun to cast their nets wider, looking for alternative theories to avoid dismissal under Janus.