Fordham Public Employees Investment Fund v. Gordon

Questions Presented

I. Whether a high-level executive tasked with recruiting potential investors may be held primarily liable under Rule 10b-5(a) and (c) of the Securities Exchange Act of 1934 when she used her position to knowingly order the dissemination of fraudulent information to investors.

II. Whether the Affiliated Ute rebuttable presumption of reliance applies to mixed cases of omissions and affirmative misrepresentations when the plaintiff focuses the complaint on omissions, and it would be too burdensome to require proof of reliance.

Elements of a 10b-5 claim: An issuer (company, etc.) made a (1) material (2) misstatement or omission with the (3) intent to deceive investors who (4) purchased or sold a security (stock, bond, etc.) in (5) reliance on those statements and (6) suffered an economic loss (7) caused by the fraud.

TL:DR  Issue 1 addresses whether a high-level executive is considered primarily liable under a broad (or narrow) application of the statute.  Issue 2 deals with the reliance element. (Under Supreme Court precedent, reliance is presumed unless rebutted.)  This case is essentially about fraud. It is not as complicated as it seems!