TEMPLETemple University James E. Beasley School of Law Alumni News • April 2019Improving Outcomes for KidsKinship Care in PhiladelphiaInside this issueCUT, PASTE, SEND, CERT.Cutting-edge news on business law from Temple Law’s 10-Q. 6CLASS NOTES and alumni profile: Sam Pond ’84READERS: We hope you like Temple Esq’s new look. The Temple Law team is always looking for new and improved ways to share news, stories, and accomplishments. Please send comments or suggestions on the magazine to Deborah M. McCreery at lawalum@temple.edu .1314KINSHIP CAREStoneleigh Fellow Karissa Phelps ’19 will tackle barriers to kinship care in Philadelphia. 2ADVICE FOR PRACTITIONERS Top ten tips for lateral career moves. Meet two new faculty members and other law school news. 8Save the Date ALUMNI WEEKEND CLE: KINSHIP CARESaturday May 18thProfessor Sarah Katz will offer a 2-hour CLE focusing on the future of kinship rights and the child welfare system:Hour 1: An examination of the systemic issues facing childrenentering the foster care system and the role of kinship care.Hour 2: Overview of the law of custodial rights of grandparents and other kin. CLE 10am to noon Luncheon will follow in Shusterman HallTo register, go to: www.mytlawconnection.com/alumniweekend2019A message from Dean Gregory MandelGregory Mandel, DeanTemple Law School has a long and storied commitment to community—both the neighborhoods of North Philadelphia into which we have sunk deep roots, and our network of faculty, students, and alumni locally and around the world. Community is part of what sets us apart among law schools and one of the features of which I’m most proud.Take, for example, our new partnership with the Stoneleigh Foundation, through which Stoneleigh Fellow Karissa Phelps ’19 will work with the Temple Legal Aid Office and the Sheller Center for Social Justice on breaking down barriers to kinship care in the Philadelphia foster care system. This project is just one of many in which Temple Law faculty and students work collaboratively with community partners to solve tough, real-world problems. Of course, Temple Law is part of a global community as well, with campuses and partnerships around the world. Our Philadelphia campus faculty are vital ambassadors to this international community, both when they visit our global partners and when they present their work around the world (p. 10). This Spring finds Professor Theresa Glennon working with our exchange partner at University County Cork in Ireland; Professor Jeffrey Dunoff at the European University Institute at Fiesole in Italy; Professor Sara Jacobson teaching our LL.M. students in Beijing, China; and Professor Jonathan Lipson at our campus in Tokyo, Japan. Their work abroad is part of Temple Law’s commitment to leadership in our global community.Finally, Temple Law is part of a rich, vibrant community of alumni and friends. You are our most enduring partners in leadership, in service, and in shaping the legal profession of tomorrow. Our commitment to you does not end when you graduate; we encourage you to look to us for guidance as you move through your career (p. 13) or confront complex issues that may impact your practice (p. 6). And, as always, we hope you will share with us your successes so that we can celebrate them with you!Thank you for being an essential part of the Temple Law community. I am grateful for the work we have already done together and look forward to all we will do to lead our many communities forward.2 • TEMPLE ESQ. APRIL 2019KinshipCarekeeping families together and improving outcomes for childrenThe last U.S. census revealed that more than 2.5 million children live with a relative who is not a parent. These children reside in what is broadly known as kinship care. The majority of these arrangements are informal, but a growing number result from foster care placements by government child welfare agencies. The idea of extended family members caring for children is not new, and in fact is a traditional practice in most cultures. Today, U.S. policy and law reflect the growing consensus that children’s outcomes in the foster care system improve when they are placed with a family member instead of a stranger. These children are more likely to be placed with siblings, to remain in a familiar culture, school, and neighborhood, and to experience a smaller number of disruptive moves.Intuitively it makes sense that children fare better with their families. But does the research bear it out? Increasingly, it does, and as a result, states and municipalities nationwide are working to remove barriers to increased kinship placements. Today, both federal and state laws require children and youth agencies to give preference to kin over strangers when placing children in foster care. Since 2000, the U.S. has increased the number of kinship placements from 25% of the total foster care population to 29%. Pennsylvania has done better than the national average, and Philadelphia has done far better, placing 47% of children with kin in 2018. In February 2018, the Family First Prevention Services Act became law, which among other things creates incentives for states to further facilitate the process of relatives becoming kinship care providers.While the proportion of kinship placements within the foster care system is growing, advocates say continuing to explore new initiatives is key. Those initiatives include proposals to refine bureaucratic processes and streamlining legal proceedings. Implementation of Family First will also focus on improving and expanding kinship navigator and family finding programs. Experts believe that as more children have the opportunity to be placed with family members, outcomes for foster kids will improve. Temple Law announces funding for ‘Pathways to Kinship Care’ In March 2019, Temple University Beasley School of Law joins in this important work with the announcement of a Stoneleigh Emerging Leader Fellowship focused on “Pathways to Kinship.” Beginning in fall 2019, Stoneleigh Emerging Leader Fellow Karissa Phelps (Temple Law ’19) will begin a range of activities aimed at improving the “pathways to kinship” in Philadelphia. Phelps says her plan is two-fold: reaching out to the stakeholders in the system—the families, caseworkers, social scientists, legal advocates, and judges—to identify obstacles to kin becoming caregivers for children entering the foster care system. She will examine laws and policies, and meet with advocates and city officials as well as grandparents’ and parents’ groups. Year two of her fellowship will be spent creating the alliances, tools, and training materials to help attorneys and community members to better navigate the system. It’s an ambitious task to accomplish in two years, but working to expand kinship care won’t—by a long shot—be the first challenge Phelps has tackled. Prior to law school, with an undergraduate degree in social work and fluency in Spanish, TEMPLE ESQ. APRIL 2019 • 3Stoneleigh Emerging Leader Fellowship ‘Pathways to Kinship Care’ MARCH 2019 The announcement of a Stoneleigh Emerging Leader Fellowship for “Pathways to Kinship Care” marks the first time Temple University Beasley School of Law has hosted a fellow from the Stoneleigh Foundation. The fellowship was awarded after Sarah Katz, Associate Clinical Professor of Law; Len Reiser, Program Coordinator, Sheller Center for Social Justice; and Robert G. Schwartz, Phyllis W. Beck Chair in Law joined forces to apply to the Stoneleigh Foundation to fund “Pathways to Kinship Care.”With the two-year project fully funded, the Stoneleigh Emerging Leader Fellow, Karissa Phelps ’19, was selected from an extensive pool of applicants. The fellowship is a hands-on opportunity for early career professionals, like Phelps, working in the Philadelphia area. The Stoneleigh Foundation’s mission is “to improve life outcomes for our community’s most vulnerable youth by advancing change in the systems that serve them, including juvenile justice, child welfare, education, and health.” The Philadelphia-based Foundation awards Fellowships to exceptional leaders who work within and alongside these systems to catalyze change. Past and current fellows have focused on issues such as building coalitions to address youth homelessness, strengthening the implementation of extended foster care, and improving interactions between police and youth.At Temple Law, the fellowship will support Phelps in researching barriers to kinship care in Philadelphia, and identifying advocacy strategies to improve access. She will be supervised directly by Katz at the Temple Legal Aid Office, where Katz directs the family law litigation clinic. Phelps will also collaborate with Schwartz, Reiser, and the Sheller Center for Social Justice, accessing the center’s expertise in systemic advocacy.Karissa Phelps ’19 begins a two-year Stoneleigh Emerging Leader Fellowship in the fall, working to reduce barriers to kinship care in Philadelphia. Phelps was a social worker in Norristown. She worked first for Laurel House, a domestic violence agency, and next for the Maternity Care Coalition (MCC) engaged in work that will inform her challenges as a fellow. At MCC, Phelps conducted home visits for an early Headstart program, and she noticed how much of her time was spent on required paperwork and scheduling—time that could be spent with the families. With any single client, Phelps noticed, a caseworker can be overwhelmed by myriad visits, doctor’s appointments, testing, and screening dates. She developed an Excel tool for caseworkers to better manage the myriad dates and deadlines. This game-changing system was adopted organization-wide, and Phelps was awarded the MCC Award for Innovation. Phelps explains why she decided to go to law school: “When I was working at Laurel House, I would accompany victims of domestic violence to their protection from abuse hearings,” says Phelps. “I could be an emotional support, but it was frustrating to me that I couldn’t advocate for them to the judge.” In the Headstart program, Phelps says she also experienced frustration when confronted with the range of challenges, many of them legal, that her clients faced. Housing, benefits, child custody. “I felt I needed to be there at those profound moments,” says Phelps. Seeking better outcomes for foster kidsPhelps experienced her initial firsthand encounter with kinship care last summer, when she was interning at the Support Center for Child Advocates representing children in dependency cases. Phelps describes a case in which a five-year-old, who had been in foster care since birth, was abruptly being removed from the only home she had ever known. The girl had begun exhibiting behavior problems around the same time the foster mother delivered a new baby of her own, and then the foster family notified DHS that they were terminating the girl’s placement. A grandmother, who the girl knew from occasional visits, was identified as a possible kinship caregiver, but her home didn’t have enough bedrooms, and she had to move before the placement could be authorized. “It was down to the wire,” remembers Phelps. “The grandmother was moving as fast as she could to get housing that would be accepted. There was an issue with a damp basement. The foster family had given plenty of warning, and at a certain point they said, ‘that’s it, we’re done.’ Luckily, the timing worked out, and the girl went to her grandmother, without having to go to a stranger in the interim.” “The trouble is, it’s a lot of bureaucracy and phone calls,” says Phelps. “I was able to achieve a good result, but I had a very small caseload and was able to devote a lot of time to it. I know that’s not always the situation.” The circumstances Phelps encountered are typical of the hurdles in the system that can result in children having multiple placements in their years in foster care. Why is increasing access to kinship care so critical to better outcomes for kids? Advocates say there are many benefits, and the key is reducing the amount of trauma that foster youth experience. Stability is crucial to good outcomes for foster kids. Because removal from a parent is already a traumatic experience, research shows that further trauma can be minimized by reducing the number of placement disruptions a foster child experiences. Children in kinship care are moved from placement to placement less often. Not surprisingly, an aunt or an uncle is more likely than continues on next page4 • TEMPLE ESQ. APRIL 2019DEFINITION: Kinship care refers to the care of children by relatives or, in some jurisdictions, close family friends (often referred to as fictive kin). Relatives are the preferred resource for children who must be removed from their birth parents because it maintains the children’s connections with their families. In the last census, more than 2.5 million children nationwide were being raised by kin without a birth parent in the home. About 120,000 children (or roughly 5% of those 2.5 million) are living with kin who are licensed as foster parents. Nationally, kinship foster placements constitute about a third of foster placements. Challenges faced by youth in foster care are greatlyexacerbated by race.Nationally, African Americans constitute 43% of the foster population, while they make up 13% of the general population.Philadelphia, as the poorest big city in the U.S., has the highest per-capita rateof children in foster care of any major city in the country. In 2018, slighty under6,000 children were placed with the Philadelphia Department of Human Services (removed from their home for safety reasons). 47% of these children are placed in kinship care.Some Factsnonrelatives to tough it out when a child is “acting out,” perhaps recognizing the child’s distress at separation from their parents, or seeing familiar family behavior that they know how to deal with. Traditional foster families are often reluctant to take on three or more siblings, whereas relatives are more likely to keep siblings together. Children in kinship homes are also more likely to stay connected to their extended family and maintain their cultures and customs. Relatives more often live in the same neighborhood as the family of origin and engage in the same community and cultural practices. Run-away youth present a chronic challenge to the foster care system, and children placed with relatives run away less frequently.Behavioral and mental health outcomes are also better for children in kinship homes. One study showed they had fewer behavioral problems three years after placement than children placed with strangers; the same study found children who moved to kinship care after a significant time in foster care were more likely to have behavioral problems than children in kinship care from the outset. A long term close relationship with an adult, such as a kinship caregiver, was found to predict more positive mental health as an adult. And, finally—and importantly—a placement with a relative is more likely to result in a stable permanent outcome for the child, whether reunification with a parent or remaining with the family member through adoption or guardianship. Kinship care is not without its critics, who warn that it is not a panacea for all foster children. Some caution that the neglect or abuse that was the basis for removal in the child’s family of origin may very well exist in the relative’s home, and the child may be safer with a stranger. Some express concern that kin may have more conflicted relationships with the natural parent than a stranger, as a family’s dynamics may spill into the sometimes stressful situation of a child’s placement. Others express concerns that placements with kin may be just as likely to destabilize as placements with strangers. That said, strangers may be more invested than a relative in seeking to adopt the child and sabotage reunification efforts with the parent. Ultimately decisions regarding the safety of a child and the permanency plan for the child are subject to oversight by Family Court. It starts with a phone call.In Philadelphia, reports of neglect or abuse of a child come to the city’s Department of Human Services (DHS) through a state-wide hotline. Both mandatory reporters (teachers, medical professionals, and child care workers) and concerned neighbors or family members may call, and if the call sounds credible, DHS must investigate within 24 hours. In the small percentage of cases where the child is deemed to be in imminent danger, a court can authorize an ex parte order to remove the child from the home. The parent has a right to a shelter care hearing to challenge the removal within 72 hours, at which point attorneys are appointed for both the parent and child. Another hearing takes place within 10 days at which time the court will make decisions about whether the child can return home, or must be placed in foster care or possibly with relatives. Hearings to review the child’s situation take place about every 90 days. In Philadelphia, about 6,000 children are in foster care at any given time. Recognizing that outcomes are better for youth who maintain family ties, Philadelphia’s DHS has worked hard to increase those numbers. “We define kin very broadly, it’s not just relatives,” says Heather Keafer, DHS’ director of communications. “Family friends, trusted teachers, coaches, or others who have a close connection with a child can qualify as kinship caregivers. “Kinship caregivers are allowed to have foster children placed more quickly into their homes,” Keafer continues. “They still have to have the required criminal and child abuse clearances and have their home assessed, but they can complete the required training at a later date.” In 2013, 31% of the city’s foster children were in kinship care; by 2016 that percentage had grown to roughly 47%. Since 2016, the numbers have stubbornly remained at less than half. The question is why, and what can be done about it?Kinship Care, continued from page three TEMPLE ESQ. APRIL 2019 • 5The future: Finding where support is needed For now, there is no legal services agency that specifically provides legal advice and representation to potential kinship caregivers to navigate the system. And advocates for children and families do not always realize the benefits of these family placements, or the advocacy strategies that can be used to overcome obstacles to children being placed with family. The fellowship will help attorneys develop and implement these advocacy strategies. Nan Feyler, a current Stoneleigh Fellow and the director of the Housing and Child Welfare Initiative at DHS (and a former Phyllis Beck Professor at Temple Law) sees a strong commitment at DHS to improving access to kinship care. Feyler says that the Stoneleigh Fellow is well-positioned to contribute to that initiative.“I think DHS’ work is probably the hardest in the city,” says Feyler. “People work really hard to make the best decisions they can. It’s hard making planning decisions in a situation where people are under the gun constantly.”Despite being a huge bureaucracy, Feyler says, DHS can be quite nimble at adopting new strategies. A recent example is a program Feyler helped implement, Rapid Rehousing for Reunification, which provides concrete assistance to parents who are within six months of reunification with children in foster care, but lack the resources for housing that is deemed adequate. “We had a lot of support, some state money, and the will to implement the program relatively quickly.”Potter, at Community Legal Services, is similarly optimistic about Philadelphia’s ability to implement positive change. In 2015, Potter released a report: “Philadelphia Should Expand its Kinship Care Program to Better Support Vulnerable Children and Families.” In the report, she made recommendations which would streamline the certification process for relatives willing to take children into their homes. These sorts of changes could be fairly easily implemented, she explains.Of course, keeping children with families and out of the foster care system to begin with remains a goal. The federal Family First Prevention Services Act also funds services to strengthen a living situation so a child will not be removed in the first place, in addition to providing services to support kinship placement. Pennsylvania is in the process of implementing the Kinship Navigator Program to help relative caregivers access a wide range of services.Today, more than ever, social scientists, lawmakers, child welfare agencies, and youth advocates are collaborating to advance a foster child’s chances of being placed with a family member. As Stoneleigh Fellow Karissa Phelps embarks on her two-year task of identifying “Pathways to Kinship,” there is tremendous enthusiasm—and need—for maintaining momentum. By hearing from community groups and families, Phelps hopes to provide input on implementation of Family First—advising on where support is most needed. She plans to represent some clients in relevant cases at Temple Legal Aid Office to hone her knowledge of the legal process. A key part of her fellowship will also be the establishment of a kinship care advisory board that could shepherd improvements in the future. It’s a moment that holds a lot of potential, for Phelps, for Temple Law School, but most importantly, for the children of the City of Philadelphia.Family law Professor Sarah Katz says, “The courts, and DHS, and all the lawyers should be asking about family at every stage of the game. Family gets ruled out for lots of reasons. And that’s exactly what this project (Pathways to Kinship) is all about, at what stage and for what reasons are family members getting pushed aside? And what are the advocacy tools that those family members can use to make sure their interest in becoming a caregiver for the child is heard?”Families ‘ruled out for a multitude of reasons’ Kathleen Creamer, the managing attorney of the family advocacy unit at Philadelphia’s Community Legal Services, has seen firsthand many cases where potential caregivers don’t come forward. “One persistent barrier to kinship placement in Philadelphia is the lack of information and legal support for prospective kinship families,” says Creamer. “Families are often confused about the rules about kinship care. How to apply for kinship care, and what their rights are if DHS denies them kinship care. With limited access to legal advocacy and support, there is often nowhere for these potential caregivers to turn.”The confusion around kinship care extends to the community at large and the very families whose children would benefit from it. Many potential caregiver kin may hesitate to step forward because they fear repercussions from inviting DHS into their homes. Families may be unaware or confused about what supports and benefits are available to help house and feed an additional family member. Research shows that relative caregivers typically have far lower incomes than other prospective adoptive or foster parents, and can be ruled out for reasons that basically disqualify them for being poor, often involving housing requirements. Maggie Potter, a social worker at Philadelphia Community Legal Services, has seen these scenarios play out with clients. As a social worker, she is brought in on complicated dependency cases. “I have worked with parents, who, in losing a child to foster care, were asking to have a relative assume care,” Potter says. “But in many cases, relatives had trouble clearing the hurdles of an adequate number of bedrooms, or prior criminal records—sometimes very old or very minor.” Katz, who practiced for eight years at Philadelphia’s Community Legal Services, representing parents in dependency proceedings, has taught the Family Law Litigation Clinic in the Temple Legal Aid Office for the last seven years. “I’ve seen families out for a multitude of reasons. There can be generational trauma—prior criminal records, family history with the child welfare system, concerns about housing,” says Katz. “Sometimes it’s too easy to say grandma has a record, but it’s from 30 years ago—should it really bar grandma? There may be hard factors which rule out a relative, such as a serious criminal record, and then there may be more subjective factors. Sometimes if there was abuse by the parent, caseworkers or advocates may question why the relative did not step in to prevent the abuse.”“In the first stages of involvement with the child welfare system, parents are often being asked questions without the benefit of counsel,” Katz continues. ”And parents often don’t understand the implications when they are asked to identify family as resources for their child.” Once relatives come forward, there is no clear road map, and that is where the Stoneleigh Fellowship comes in. 6 • TEMPLE ESQ. APRIL 2019This article is reprinted from The Temple 10-Q, the electronic forum for cutting edge issues in business law published by Temple University Beasley School of Law, edited by Professors Jonathan C. Lipson, Salil Mehra, and Olufunmilayo Arewa; and Jonathan Broder ’83. To subscribe to 10-Q go to www2.law.temple.edu/10q/. On December 3, 2018, the U.S. Supreme Court heard oral argument on Lorenzo v. Securities and Exchange Commission, a seminal case that will resolve a circuit split on liability for three simple acts—cut, paste, and send—done at another person’s direction. After this decision, broker-dealers and others in the industry will better understand the scope of Rule 10b-5. Shareholders also should pay close attention, as the ability to privately sue certain actors for fraudulent statements and related acts could be affected.It all began when Francis Lorenzo cut some text, pasted it into an email, and clicked “send.” Lorenzo was the director of investment banking at Charles Vista, LLC, an SEC-registered broker-dealer. In that capacity, Lorenzo’s duties involved conducting due diligence on his clients, including reviewing their financial statements and public filings. In September 2009, Charles Vista served as the exclusive placement agent for a startup company’s $15 million convertible debenture offering. The following month, the company issued two public filings indicating that (1) its technological asset, a gasification technology, was valueless; (2) there was a total impairment of its intangible assets; and (3) the company’s total assets were valued at approximately $370,000. These public filings were a reflection of the failed gasification technology.There is no dispute that Lorenzo had access to the public filings that revealed a significant decline in the company’s financial health. There is also no dispute that prior to the release of the public filings, Lorenzo cautioned his boss about offering a $15 million convertible debenture for a company that had no assets to liquidate to protect its investors in the event of default. Nevertheless, sometime thereafter Lorenzo emailed two investors stating that: (1) the company had more than $10 million in confirmed assets; (2) the purchase orders and letters of interest totaled over $43 million; and (3) Charles Vista would raise additional monies to repay debenture holders, if necessary. All statements were false. Moreover, these emails were actually typed by Lorenzo’s boss and sent to Lorenzo with the directive to send them to the two investors, which he did. Both emails noted that they were being sent at the request of Lorenzo’s boss. The primary question, then, is whether Lorenzo’s “cut, paste, and send” can make him liable for making untrue statements in violation of Rule 10b-5(b). And if he cannot be found liable for making untrue statements, can he be found liable for employing a scheme to defraud or for engaging in an act that operates to defraud?Four years later, the SEC charged Lorenzo, his boss, and Charles Vista with violating antifraud provisions of the federal securities laws. Lorenzo’s boss and Charles Vista settled with the SEC—but Lorenzo did not. Among the SEC’s charges against Lorenzo were claims for violating all three subsections of Rule 10b-5, which accused Lorenzo of making a fraudulent statement and engaging in a fraudulent scheme. Specifically, Rule 10b-5 provides that[i]t shall be unlawful for any person directly or indirectly … (a) [t]o employ any device, scheme, or artifice to defraud, (b) [t]o make any untrue statement of a material fact … or (c) [t]o engage in any act … which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.17 C.F.R. 240.10b-5 (emphasis added). The SEC did not charge Lorenzo with aiding or abetting a fraudulent act.Cut, Paste, Send, Cert.: How 3 Simple Acts May Change the Securities andWhite-Collar Landscape TEMPLE ESQ. APRIL 2019 • 7Cut, Paste, Send, Cert. was authored by Kristen Gibbons Feden ’09, an associate at Stradley Ronon and Michael J. Engle, the chair of the white collar defense, internal investigations, and corporate compliance group at Stradley Ronon in Philadelphia.The SEC prevailed against Lorenzo in administrative proceedings where the judge found Lorenzo violated all three subsections of Rule 10b-5. The judge imposed stiff penalties, including banning Lorenzo from the industry for life. He appealed to the full commission, but it sustained the administrative judge’s decision, finding that Lorenzo knew the statements in the emails were false and misleading when he sent them. Lorenzo took an appeal to the Court of Appeals for the District of Columbia Circuit, but he lost once again, in a 2-1 decision.Relying on guidance in Janus Capital Group Inc. v. First Derivative Traders, a 2011 Supreme Court 5-4 decision authored by Justice Thomas, the court decided Lorenzo did not “make” a statement under subsection (b) of Rule 10b-5, because he had no authority and control over the statement. “One ‘makes’ a statement by stating it … For purposes of Rule 10b–5, … One who prepares or publishes a statement on behalf of another is not its maker.” 564 U.S. 135, 142-143 (2011) (emphasis added). The court found, however, Lorenzo’s conduct of transmitting misinformation directly to the investors made his involvement transparent, and violated Rule 10b-5 subsections (a) and (c). This made him liable as a fraudulent schemer under an aiding and abetting or substantial assistance theory, a holding the majority cited as supported under Janus. See Janus, 564 U.S. at 143 (“Rule 10b-5’s private right of action does not include suits against aiders and abettors. Such suits – against entities that contribute ‘substantial assistance’ to the making of a statement but do not actually make it – may be brought by the SEC, see 15 U.S.C.A. § 78t(e), but not by private parties.”) (emphasis added). Notably, Justices Breyer, Ginsburg, Sotomayor, and Kagan, the four Janus dissenters, heard oral argument and will be rendering a decision in this matter.In dissent, Judge Brett Kavanaugh (now Associate Justice of the U.S. Supreme Court) opined that Lorenzo could not be deemed a schemer, because the statements were made by his boss—not him. In other words, the SEC should have been required to show more than a misstatement in proving that Lorenzo violated Rule 10b-5(a) and (c). According to Judge Kavanaugh, holding otherwise equates to “legal jujitsu” and eliminates the distinction between primary liability (direct violation) and secondary liability (aiding and abetting). Judge Kavanaugh harshly criticized the SEC, claiming it is attempting to “unilaterally rewrite the law” and “expand the scope of primary liability under securities law.” Judge Kavanaugh’s position has commanded majorities of panels in the Second, Eighth, and Ninth Circuits. 1 Due to his role as Associate Justice of the U.S. Supreme Court, Justice Kavanaugh recused himself, leaving a bench of eight, four of which include the Janus dissenters, to determine Lorenzo’s fate.While Lorenzo’s fate seems to be sealed based on the assumption that the four dissenters in Janus will decline to extend it (which would result in the affirmance of the lower court’s decision, and perhaps a clarified scope of 10b-5(b)), questions posed by Justice Alito suggest a 5-4 decision, and perhaps a clearer definition of scheme liability. During oral argument, Justice Alito pressed Robert Heim, counsel for Lorenzo, on numerous occasions, to explain how Lorenzo’s conduct was not violative of Rule 10b-5(c), eventually asserting, “[Lorenzo is] a principal under (c)… he did the act that is described in (c).” Transcript of Oral Argument at 13, Lorenzo v. Securities and Exchange Commission, (No. 17-1077). As Christopher Michel argued on behalf of the SEC, affirming Lorenzo’s liability would be consistent with Justice Alito’s prior stance in a tax evasion case, where Justice Alito opined that “enumeration” of tax evasion in a statute that covered both criminal deceit and tax evasion did not preempt application of that statute to conduct that was solely criminally deceptive. Id. at 54-55. Mr. Michel analogized that case to Lorenzo, stating, “the enumeration of statements in Rule 10b-5(b) does not preempt or foreclose acts of conduct that fall within the text of the statute.” Id. at 55.While Lorenzo is simply looking for removal of the penalty imposed on him, the industry will be watching for how the Court might clarify the scope of Janus and the distinctions between primary and secondary liability under Rule 10b-5, particularly as it applies to actions instituted by the SEC. Either way, it will be interesting to watch the Supreme Court change the securities and white-collar landscape, and, more specifically, the scope of the scheme liability provisions by ruling on three simple acts of cutting, pasting, and sending an email. Stay tuned. If he cannot be found liable for making untrue statements, can he be found liable for employing a scheme to defraud or for engaging in an act that operates to defraud?‘’1 See e.g., Public Pension Fund Group v. KV Pharmaceutical Co., 679 F.3d 972, 987 (8th Cir. 2012); WPP Luxembourg Gamma Three Sarl v. Spot Runner, Inc., 655 F.3d 1039, 1057 (9th Cir. 2011); Lentell v. Merrill Lynch & Co., 396 F.3d 161, 177 (2d Cir. 2005).Next >