The Second Circuit Court of Appeals recently issued a decision that may prevent the expansion of scheme liability under the federal securities laws.  The SEC brought scheme liability allegations against Rio Tinto, its CEO, and its CFO, based on their alleged failure to correct prior materially misleading statements that had been made to the company’s audit committee and its auditors.  The SEC argued that a 2019 Supreme Court decision supported holding that defendants’ failure to correct the prior misleading statements was a basis for scheme liability.   For the reasons explained in the following article published in the New York Law Journal on August 31, the Second Circuit rejected this approach.   

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Photo of Margaret A. Dale Margaret A. Dale

Margaret Dale is a trial lawyer and first-chair litigator handling complex business disputes across a wide variety of industries, including: consumer products, media and entertainment, financial services, telecommunications and technology, and higher education. She is a former vice-chair of the Litigation Department, and…

Margaret Dale is a trial lawyer and first-chair litigator handling complex business disputes across a wide variety of industries, including: consumer products, media and entertainment, financial services, telecommunications and technology, and higher education. She is a former vice-chair of the Litigation Department, and heads the Department’s Data Privacy and Cybersecurity Practice Group. Margaret has been recognized since 2017 in Benchmark Litigation’s Top 250 Women in Litigation.

Margaret’s practice covers the spectrum of complex commercial disputes, including privacy and data security matters, as well as disputes involving M&A, intellectual property, bankruptcy and insolvency, securities, corporate governance, and asset management.

Margaret regularly counsels clients before litigation commences to assess risk, adopt strategies to minimize or deflect disputes, and resolve matters without going to court.

Margaret is a frequent writer, including authoring a regular column on corporate and securities law in the New York Law Journal. She also serves as the lead editor of Proskauer’s blog on commercial litigation, Minding Your BusinessShe also authored the chapter titled “Privileges” in the treatise Commercial Litigation in New York State Courts (Haig, 5th ed.), as well as the chapter titled “Data Breach Litigation” in PLI’s Proskauer on Privacy.

Margaret maintains an active pro bono practice advocating on issues relating to women, children and veterans. She serves on the Board of Directors of CFR (Center for Family Representation), VLA (Volunteer Lawyers for the Arts), JALBC (Judges and Lawyers Breast Cancer Alert), and the City Bar Fund.

Photo of Mark Harris Mark Harris

Mark Harris is a partner in the Litigation Department, co-chair of the Appellate Practice Group, and a member of the Securities Litigation and White Collar Defense & Investigations Groups.  He represents institutional and individual clients in both civil and criminal litigations.

Mark is…

Mark Harris is a partner in the Litigation Department, co-chair of the Appellate Practice Group, and a member of the Securities Litigation and White Collar Defense & Investigations Groups.  He represents institutional and individual clients in both civil and criminal litigations.

Mark is a former clerk to U.S. Supreme Court Justices John Paul Stevens and Lewis Powell, Jr., and Judge Joel Flaum of the U.S. Court of Appeals for the Seventh Circuit. Mark subsequently served as an Assistant U.S. Attorney for the Southern District of New York, during which he prosecuted a broad spectrum of federal crimes, including health-care fraud, financial fraud, and corporate embezzlement, and tried a number of jury trials and argued before the Second Circuit.

Mark has handled dozens of cases in the U.S. Supreme Court and other appellate courts in a variety of areas spanning criminal law, patent, copyright, labor relations, and administrative law, including:

  • Representing Biosig Instruments before the U.S. Supreme Court and the Federal Circuit, in a case that redefined the standard for patent definiteness and upheld the validity of Biosig’s patent.  He was named The American Lawyer’s Litigator of the Week for that result.
  • Obtaining reversal of the trial conviction of a former Gen Re executive in the Second Circuit.

  • Persuading the Second Circuit via a petition for interlocutory review and merits brief to vacate a class-certification order entered against Sprint Corporation.

  • Successfully representing electronic publishers before the U.S. Supreme Court in Reed Elsevier Inc. v. Muchnick, which Managing Intellectual Property Magazine named the 2010 “U.S. Copyright Case of the Year.”

  • Successfully representing an employer before the U.S. Supreme Court in 14 Penn Plaza LLC v. Pyett, which overturned 35 years of precedents concerning the enforceability of arbitration clauses in labor agreements.

Mark has handled numerous matters involving securities fraud, tax evasion, insurance fraud, and a variety of financial crimes. Significant representations have included the following:

  • John and Timothy Rigas, principals of Adelphia Communications Corp., at their resentencing and before the Second Circuit.
  • The president of a major international company whom federal authorities sought to extradite for tax offenses allegedly committed in the United States.

  • The former CEO of Princeton Economics International, whose release Mark helped win from the longest term of federal civil contempt in U.S. history.

  • An investor charged with securities fraud involving the conversion of a mutual savings bank to a capital stock bank.

Since 1996, Mark has been a member of the Board of Editors of the Federal Sentencing Reporter and a frequent contributor. His work on behalf of non-U.S. clients was featured in the American Lawyer’s 2006 Litigation supplement. He has lectured on both criminal law and appellate practice before the International Bar Association, the National Association of Criminal Defense Lawyers, PLI, and the ABA Sections of Litigation, Criminal Law, and Employment and Labor Law, and has been interviewed by Bloomberg Radio, the National Law Journal, WINS AM-1010, Law360Legal Times, and other news organizations.

He also serves on the Board of Trustees of the National Museum of Mathematics.

Photo of Julia Alonzo Julia Alonzo

Julia Alonzo is a senior counsel in the Litigation Department with a focus on securities and corporate governance litigation. She is experienced in complex civil securities matters and parallel proceedings, including federal securities class actions, shareholder derivative lawsuits, internal investigations, and SEC investigations.

Julia Alonzo is a senior counsel in the Litigation Department with a focus on securities and corporate governance litigation. She is experienced in complex civil securities matters and parallel proceedings, including federal securities class actions, shareholder derivative lawsuits, internal investigations, and SEC investigations. In addition, Julia has represented numerous companies facing litigation relating to pending M&A transactions. Julia is also a member of Proskauer’s Asset Management Litigation team.

Julia writes on topics relating to all aspects of civil securities litigation. She regularly updates a definitive treatise on shareholder derivative law, Shareholder Derivative Litigation: Besieging the Board. She is also the co-editor of Proskauer’s Corporate Defense & Disputes blog, which focuses on federal securities litigation, as well as the Minding Your Business blog on commercial litigation.

Julia maintains an active pro bono practice, with a focus on asylum, child welfare issues, and housing law.

Photo of Joseph Hartunian Joseph Hartunian

Joe Hartunian is an associate in the Litigation Department.

Joe earned his J.D. from the University of Michigan Law School, where he was an executive editor of the Michigan Journal of Law Reform. Joe previously served as a law clerk to the…

Joe Hartunian is an associate in the Litigation Department.

Joe earned his J.D. from the University of Michigan Law School, where he was an executive editor of the Michigan Journal of Law Reform. Joe previously served as a law clerk to the Honorable Peter W. Hall of the United States Court of Appeals for the Second Circuit.

Prior to law school, Joe served as a legislative aide for Senator Charles E. Schumer on the Senate Judiciary Committee, focusing on issues related to opioid abuse, telecommunications and gun safety. Upon graduation, he returned to the committee as an advisor to Senator Amy Klobuchar on the nomination of now-Justice Brett Kavanaugh to the Supreme Court.