SEC v. Rio Tinto, No. 21-2042 (2d Cir. 2022)
Annotate this Case
The Securities and Exchange Commission (“SEC”) brought scheme liability claims in a 2017 enforcement action against Rio Tinto plc, Rio Tinto Limited, and its CEO and CFO, pursuant to Rule 10b-5(a) and (c), promulgated under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), and pursuant to Section 17(a)(1) and (3) of the Securities Act of 1933 (“Securities Act”). Citing Lentell v. Merrill Lynch & Co., 396 F.3d 161 (2d Cir. 2005) (“Lentell”), the district court dismissed the scheme liability claims in a March 2019 order (the “Dismissal Order”) on the ground that the conduct alleged constituted misstatements and omissions only, and is, therefore, an insufficient basis for scheme liability.
On appeal, the SEC contended that Lorenzo abrogates Lentell. The Second Circuit affirmed the district court’s ruling finding that Lentell remains sound. The question on appeal was whether misstatements and omissions--without more--can support scheme liability pursuant to Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) promulgated thereunder, and Securities Act Section 17(a)(1) and (3).
The court explained that while Lorenzo acknowledges that there is leakage between and among the three subsections of each provision, the divisions between the subsections remain distinct. Until further guidance from the Supreme Court, 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.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.