fraud but that fraud clearly included material misrepresentations about transactions and covered securities the complaints in this case bear that out plaintiffs allege specifically that their money was their misrepresentations about how their money would be invested in covered securities that the misrepresentation was material and that indeed the security of the underlying investments was the most important factor in securing own investment in the cd i think there's some problem with whether or not this was covered securities but i also think that's not in the case anymore and i correct in the latter since i certainly agree with you on the latter assumption your honor which is both lower courts decided this on the case that the complaint specifically referred to covered securities specifically enough i want to belabor the point if they don't think it's in the case but i will say i do think there's a reason that that was not a contested issue because if you think  securities that were referred to strong multinational corporations major international banks those are companies that are traded on u s national exchanges also if you get into the details of the record i mean if you want to look at something joint appendix page seven forty six is an attachment to the willis complaint and there's a reference to the new york stock exchange and it's a translated letter to investors and you could read it more than one way but i sure think the whole point of that paragraph is to lead the plaintiffs to think that their stocks are buying an interest in stocks we traded on the new york stock exchange particularly if if i'm trying to get a home loan and they ask you what assets you have and i list a couple of stocks in fact it's fraudulent i don't own them that's  cover transaction that's a ten b five violation well i don't know mr chief justice that would depend on the answer to a question that i don't think the court has to decide in this case which is whether a reference to your stock holdings would be sufficient to  you say you're going to pay off the loan by selling some stock holdings eventually yeah i think that probably would be covered your honor and i don't think that's any great surprise i mean this court held in a case called rueben against the united states that if you pledge securities that are and tell the bank that they're valuable and they in fact aren't that that's covered by the securities law in that case it wasn't just in connection with it was actually considered a constructive sale or transfer of the security that they were going over to securities right i mean you're you're pledging covered securities to the break in make a rip misrepresentation about right well that's right i'm just saying though that i don't think the fact that you can have a misrepresentation in connection with a loan application or something like that is all that surprising in the sense that the way that both ten b ten b five and sluice are structured the in connection with requirement can take something that might otherwise be plain fraud and if there's a misrepresentation in connection with a security or covered security that makes it security get out of my goodness are there cases where they brought such things i mean every state has laws that forbid fraud and mortgages are probably loans are probably made in the billions every year you know it takes you someone to say on his sheet of listing assets to have a covered security and say don't worry i'll hold these all hold them or don't worry i will sell this one and buy that one don't worry i'll buy another one i won't i won't put up a security my sprinkler system i will sell the sprinkler system and use it to buy a covered exchange i guess if those fall within the securities laws we would have expected to see billions of actions why not with respect i don't think in most of these cases anything is going to particularly turn on that i also think i'm happy you know that's what you think but i'd need to know why you think it if there building if i'm right in my what i just said because there are lots of cases where whether you can prosecute a fraud or securities fraud is not going to make much difference you can go at it either way there are circumstances really two things that are issue here one is this going to tell me a case where the f c c has ever there may be such cases but what it's done is somebody simply tried to get a loan and he put on that sheet of paper listing assets a covered security and he said i intend to keep it or he said you know i will buy some more also buy some more or you know put in your three things just list the case where they've ever prosecuted that as a securities fraud or private people have after all it's beneficial sometimes for private people what are the cases your honor i don't know that their case is directly on point but let me be clear our theory here does not by any means necessarily have to extend to those holder situations what is it issue here is not just a misrepresentation about holdings of securities it is their misrepresentations about covered securities transactions and more particularly they are false promises to purchase covered securities for plaintiffs benefit see cases that are brought under those circumstances and as well there should be because when you put so something whether it's a non covered security or something else based on a misrepresentation about covered securities you trigger the google stock and home with it is that covered by the securities laws now i would think probably not at the end of the day but i also would say that this is so far removed from that i mean first how is it removed from that because it has the same structural features which is it's a misrepresentation about what you're going to do with securities that in fact does not affect any securities trade and what it affects is a decision to do something else here to buy d s or in my example to go get married with respect your honor i think this court's already crossed the bridge that you don't have to affect the specific transaction in which you are the fraud is alleged to be associated with so you have cases like o'hagan for example where the actual transaction on the on the exchange is not solely with the fraud and the victim of the fraud doesn't even trade the holder of the competent one of our cases there's been something to say when somebody can ask the question how has this affected a potential purchaser or seller in the market for the relevant securities and here there's a perspective i disagree with the premis not necessarily the victim of the fraud but somebody has to have had some transaction in the market it's the kind of misrepresentation that would affect someone and making transactions in the covered market how would this do that well if the only way in which there isn't that kind of transaction here is because the fraud was bigger as we put point out in the briefs if you imagine that this was a thing where they said look we're going to purchase multinational corporations and instead they purchased domestic corporations well then there would be a transaction that would not otherwise occurred on the market in domestic transactions that would have been perfectly analogous to the kind of normal transaction that took place in bank for bank life or the sanford on the market and yet the fraud was sufficiently sociedad with this and i don't think this court wants to say that the only frauds that are not in connection with are the really big what is the case that what is the specific case private or s c c that comes the closest i grant you there is none direct but comes the closest to justice kagan is hypothetical if you closest case to the horribles that they foresee if you lose well i think the probably i would start with the richard wine case which is cited on page twenty one of their brief and with that a shows is that you can have frauds in connection with covered securities that affect things that are either not covered securities or in that case are nothing at all mr line was very clever he took people who were interested in having their kids go to college and needed financial aid and he said i think your assets from you and they'll be mine i'm not going to give you anything in return not covered security nothing because the whole point of this is to get your assets off your books and what i'll do is i'll invest those in the market make a bunch of money and in four years when you're no longer worried about financial aid i'll return your principle in some of the is justice kagan side pathetically and some of the others it seems that it's really irrelevant whether the assets in question are securities or some other asset and it's also and therefore irrelevant whether if it involves securities whether they're covered or they're not cover now would you be willing to concede that in that situation where you really are you talking about it's an asset it doesn't matter whether it's covered security or  t or gold that in that situation ten b doesn't reach i think i would agree with that justice alito but for a slightly different reason than you may be imagining which is i think one of the mistakes that can be made here is to ask in connection with do all the work and the statute has multiple requirements including a materiality requirement and as your question suggests if you're making a misrepresentation and the whole point of it is to just tell somebody that look i have wealth or i have sort of assets i don't know that the specific nature of the makes any difference but in a case like this the whole point of this fraud was to take a non coverage security and to imbue it with some of the pie qualities of a covered security the most important of which being liquidity and if  at sort of the underlying brochures here that were used to market this that's really what this fraud was all about these six these at c d's were offered as being better than normal c d s because we can get your money whenever you need it doesn't matter that there is a parent there is not an allegation that there actually are any purchases or sales of covered securities it says in can that the statute says in connection with the purchase or sale of a covered security and there weren't there i don't believe there's an allegation that they actually were purchased or sold is that matter it doesn't matter your honor for the reason i indicated earlier which is you don't want to draw a line that basically says look if you buy different securities than you were supposed to or yourself fewer than you were supposed to that's covered but it was made off and you go all the way and simply lie about the whole thing and there never were any securities purchases at all but that somehow that what's your best case on that well i think again if you if you want to start with s again on page twenty one there's the jet adjudication where again there was a broker dealer in that case and they just made up the trades they told their employer you know look look i've done look at these great trades and there just weren't any trades and of course all of the made off cases were substantial number of the made off cases fit that fit that that categorization it's actually not there were that this case does because at the end of the day i think what's alleged is you know there were no purchases or substantially less purchases of cover securities than represented nobody's really thought the difference between zero and substantially less made much of a difference in this case and i would certainly like i said suggest that that's the right result because whatever else is true you can't somehow have a better fraud that's  with i mean the hypothetical the danforth used because i think it helps illustrate why even if coincide is the test we satisfied here with sanford was really distinguishing these two cases one where a broker dealer gets money from a potential client with the purest intentions and only at a later stage they say you know i'm kind of below in my own payments i need some money i'm going to bessel the funds and sanford said in that context the fraud and the security purchases are independent events i don't think anybody would look at this case and say that the misrepresentations about covered securities purchases and the fraud were independent events nor would anybody say that this isn't a case where from the very beginning there was an intent by stanford not to make good on the promise to purchase coverage securities on behalf of the points so this is like sanford itself where wolf we're holding cit self we're good the fraudulent intent is there at the very moment the transaction takes place and again we're holdings is another example where this court says and dictum that you know the one thing if they sold the option and only later independently decided that they want to perform on the option but if they had the intent all along they clearly coincide  purpose of the securities laws was to protect the purchasers and sellers of the covered securities there is no purchaser or cover or seller a covered security involved here well there it's a purchaser of not not covered securities who is being defrauded if any would why why would the federal securities laws protect that  are purchases of covered securities that the alleged purchases there the false promises that i'm only just in purchases right well as i said i don't think anything turns on it but there actually were some purchases and the only element of fraud in there was by the bank itself there who are the only ones whose purchases are sales could be said to have been affected by the misrepresentation and of course they can't make any money that basis right mr chief justice and that's been the case in other cases as well the security transaction of bankers life neither the seller nor the buyer of those transactions had was affected by directly by the fraud in sanford there were security sales those secured somebody else somebody else was  sure and the plaintiffs were clearly affected by this fraud not by the purchase or sale right they were affected according your theory by the fact that all they told us there were these stocks but the actual purchases and sales the fraud did not go to the purchas were feeder funds that people were buying into that were uncovered securities and what they were being told is that the money that was being put into the feeder fund was then going to go on to be used to purchase coverage securities that they themselves were not could have an ownership interest in but that the benefit of those purchases was going to be passed back to them through this intermediate layers but the case that he said this is i'm quite interested in your reaction which cases we brought this would if you lose here would prevent you from bringing and longing was the one that was mentioned yes and i go along there is a broker who says to a client give me some money and i'll buy some securities on the exchange for you and he gave me the money and he didn't well that's directly related to a promise that is going to effect the purchase or sale of his security directly he's promising someone to buy securities for his account i don't think that that's this case i actually think the line case is much more analogous analogous to this case then your honor is suggesting because what was happening in line is the broker said to the victims was you have children who are going to college you don't want to have this money around because you want to be able to get financial aid so give the money to me and in several years i'll give that money back to you with you didn't say i will well you and i can understand how a promise to buy securities for you is a promise to a person or a statement that will lead a person to take a position whether it's this point or for someone in the world it will lead someone in the world to take a position with your opponent say is that is what is present not present here not the person who is giving the money nor anyone else with the possible exception of the defendant is being led by this statement to take a position in a market for against sell or even if you like not sell or buy hold off throw that in your honor that just to return to line for a moment and i'd like to address sort of how the purposes of the securities laws are implicated in a situation like this in line what the victims were told was that they were going to be given the money back after four years had passed with interest calculated above market rates so they're not being told that they're going to be given whatever profit is made on the securities transactions or as i read line although it's slightly correct test is something along the lines of what justice pryor just said is is this the kind of representation that could affect somebody doesn't have to be the victim of the fraud it can be somebody else but that could affect somebody decision to buy or sell or hold coverage securities can you satisfied that test yes i think so because i think that here there is a major effect on investor confidence and investor confidence specifically with respect to cover securities in several different ways if people see the lies of the kind here where someone is telling someone else i'm going to buy covered securities and it's going to benefit you are being made and those wise a re well that's a profit on the victims then i think people are less likely to go to their broker and say here are some money go out on the market and buy me some securities it's a it's a lot of it goes to the mechanism by which the securities markets operate which is the purchases  sales and it makes it less likely for people to be willing to believe that when they engage in purchases and sales that something's really going to happen and when i mean if you want if you want a church and heard of some of that there are lots of people who are evil maybe then you wouldn't invest well but this is much more particular again to the mechanism by which the securities other markets operate and i think another way to look at it is just to imagine the honest version of stanford if someone honestly said to cd purchasers give me your money and i'm going to put it into covered take action with respect to the non coverage securities so to the extent there's diminished confidence in the securities markets the sea has all the tools of billable to address that the question is the different one well i think it's true that the f c c would continue to have tools but i do i mean in fact this would inspire confidence to the extent that lawyers can bring these actions as opposed to having them precluded which is what you're arguing for well i'm sorry i issue that was raised earlier about whether an actual purchaser of sale needed to be made or whether a purported or intended purchase or sale is sufficient and i think practically from the moment that the thirty three and thirty i don't know how we can and you say yes this would that would be met here i don't know how we can determine what whether something suddenly of this nature or maybe even further removed would in fact would affect investor confidence and somebody might read about this scheme in the paper and said well you know there's a lot of hanky panky going on with the sale of any kind of securities and c d s i'm just going to keep cash under my mattress how do we how would we determine that well i think it's for the reasons that i gave earlier which is that this goes to the purchased sale mechanism and that we know that people have to have confidence in that order in order for the securities markets to work it may well be that people also  never occurred i mean it could have read in connection with the purchase or sale or the promised purchase or sale or the contemplated poor purchase or sale but it doesn't it's in connection with the purchase or sale i don't know how you can that stick to a situation where there has been no purchase or sale that's true your honor but it also doesn't say the consummated purchase or sale and so i think the purported intended consummated all those things are swept up in the text and i think that's consistent with the way that you would use the phrase in ordinary life if i were going to go to my real estate brokers to sell my house i might gather up a bunch of documents i might show up at the office at a certain time in connection with the sale of my house and even if the sale falls through and there is no a false promise to purchase securities for oneself in which no other person will have an interest is not a material misrepresentation in connection with the purchase or sale of covered securities the other side is asked to do adopt a rule that has never been in any other proceeding it's never been advocated as i understand it in its briefs in this case it's never been adopted by any court ever and i think there are good reasons for that their theory is that what happened here is that there was a promise to buy coverage securities that would be for the benefit of someone else that has to textual laws it doesn't comport with the purpose of the statute and it would have extraordinary consequences it doesn't can it doesn't conform to the tex statute in either of two ways covered security which is what the plaintiffs here purchase is a defined term it is a security but only the subset of securities that are traded on a national exchange and some of the additions that would involve for example mutual funds and so congress didn't say that if it was in connection with the purchase or sale of a covered security if it was a covered security that someone else would get the benefit of it is what has to be bought here is a stock and instead what was bought here was a cd as mr comment says this is a case of a massive fraud he could well have said this is a case of a massive securities fraud but it was not a case of ok what is the jumping off point for this flaw the jumping off point is that there is that defined term covered security so only applies if there is a material misrepresentation in the in the purchase or sale of a covered secure everybody  victim the case proceeds on the assumption that the the c d s were not covered securities the question is whether it's the in connection with requirement is met by the allegation which is interpreted to mean that there would be future purchase of some sales of covered securities so i'm not sure what you're getting out of the fact that covered securities is is said to find tom because congress asked you were told the courts to focus on the question of what the product is that there was a misrepresentation in the course of the transaction in the course of the purchase or sale and that is only a covered security it is not some other product that has as a benefit in interest in a covered she doesn't say a misrepresentation covered security and says a misrepresentation in connection with that's actually i think you're on a really good point for us because the other side's argument up till the brief up until they were argument is that was a misrepresentation about covered securities that would trigger the problem with their position is that what the court has always said when it talked about the definition of in connection with this really two things it has to be flexible we have to give the f c c the ability to deal with novel frauds but because metaphysically everything is connected with everything else we're going to have to draw a line there's going to have to be some limit and you've pointed out that it's not an easily administered one but the the the one thing that stops ten b five from getting completely out of control is that all of the fraud involved are ones that the court has recognized would have a in effect on the regulated market that was true in o'hagan it was true in sanford now i realize that my friend from the solicitor general's office said today at the podium they can imagine that this fraud would have an effect on the regulated market they did say the opposite in their briefing in that case their brief at the search stage said there was no possibility that there would be an effect on the regulated market and so this i  moment please and they said there is no the quote almost verbatim there was no prospect that this fraud would have an effect on the covered securities market the second textual flaw if that ability to determine is the enforcement authority here that something has is in connection with the purchase or sale of the regulated security is whether it would have an effect on the regulated market they wrote a brief to saying that and you really don't agree with that anyway i think that that is their best hope and i don't think they can satisfy we think their authority is narrower still what is your position if the broker says give me one hundred thousand dollars and i will buy a covered securities and then he just pocket that and and and please that prevail because what's happening is the broker is saying i will purchase for you the covered securities that's what the line case stands for their brief in and i don't see how this case is that much different they say  we were going to invest in c d s in the c d s will be backed by purchase securities that we will purchase for you ok so the critical difference i think is in the definition of purchase and that was going to be the  point out and that is we can acknowledge that they would have a much stronger case in the hypothetical that you've described if the covered securities are pledged to back the c d s this happens for example in a margin account it happens if there are lots of times someone will say i intend to use your money to buy covered securities to buy stocks and i'm providing those stocks as security for the loan the reason that securities fraud is the definition of a purchase includes pledging the pledging the stops that's really important and it tracks with the court's holding that in connection with reaches as far as frauds that would have an effect on the regulated market imagine if i were allowed to say look i'm going to buy coverage securities and you now hold an interest in them and enforceable interest in the stocks and if that were not securities fraud the market couldn't function very well because things like margin accounts you could never have the confidence that you have the protection of twenty five the critical difference justice kennedy is between two different cases if the this case which is s side b says look among all of its many misrepresentations i will take your money and i intend to buy covered securities that gets you you know putting all the side the difficulty of liquid assets versus covered securities give them their best version of the representation here but it was only buying it for itself it did not lead to sell ok call for determination whether in the representation in the art or the craft of the complaint we we do defend that rule we do not think it's the best ground to decide the case and explain what i mean by that the fifth circuit undertook to articulate a rule that would govern all cases in which someone purchased something that was supposedly invested in covered security so including for example the made off cases where there was securities fraud made off falsely sold the interest in a fund that's core securities fraud and side b never sold any securities at all it only sold c d s so if the court believed that the fifth circuit was correct that it was appropriate to decide all of these derivative investments if i could cases then we think you need a flexible term like more than tangentially related but we think this case stands on its own on the question of look if i promise if i sell you something and i say i'm going to take the money and buy c d s for myself and those c d s have a quality of being liquid now you don't have an interest in the c d s i'm not pledging them to you so there's no purchase by use of a  then that's not securities fraud and i did want to get but that's the line case where i'm told by the government you were trying to say i know that justice scalia doesn't think it's important but i do ok if someone tells me so your securities give me the money i will buy securities for myself and give you a fixed rate of return later i think that's in connection with the purchase and sale of securities even though it's not legally purchased for my benefit ok two things about that just a sort of more i will say that if what i think you were actually told from the podium is that it is unclear from the f c c as administrative opinion whether the persons who gave the money to the broker as an investment were actually given an interest in the security says just not clear from that opinion there's certainly no f c c holding let's assume they were ok then the second thing i would say is the f c c has always been very clear to you that the key part of your hypothetical is that it's a broker and that as you see it said to you repeatedly and i will just give this to you from there's an for grief at page twenty three there's a particularly strong connection between fraud and securities transactions when stock brokers like respondent misappropriate securities and securities proceeds from brokerage accounts the key feature is that you can understand why it is that the market can function if your stock broker is making promises about buying and selling securities this is a bank this is a bank that doesn't issue covered securities in any way because it's a foreign bank that issues only the non covered securities that congress specifically excluded because i think would difficult on j fisk gets into his horse and carriage drives up and down wall street and says i'm going to buy union pacific i'm going to buy union pacific knowing people will in fact all run up and buy it quickly what he really intends to do is when it comes out he did and he's going to sell our anyway typical fraud now that certainly covered yes that's market research really so so so now here what we have is mr stanford i guess saying to people i'm going to buy securities i'm going to buy securities  turns out to be completely untrue so we know that made in securities fraud the major cases are about the next generation the indirect purchases and that is people who bought into a fund and the fund body intimate off now those cases have been resolved on two separate grounds that may not be entirely consistent neither one of which has any implications for our case theory number one and this is in an opinion by judge ray cough just a few weeks ago for the second circuit he says look that indirect purchaser cases are covered by salusa because i look at sluice and it says look at the allegation in the court allegation in those cases of covered securities fraud it is that i was deceived i lost my money i should say because made often gaijin securities fraud he was selling air he wasn't selling anything at all that's not this case be sold only non coverage securities the second way they have been resolved is that you may be said to have when you bought into what they're called the feeder funds that instead in turn invested in made off you may well have purchased an interest in the made up fund itself and therefore you were engaged effectively in the purchase or sale of covered securities that is clearly on the other side of the line from the nobody contends that we bought anything other than non covered assets now i have tried to get to the hypotheticals that the court put to my friends in the first half hour and realized that the i'm sorry i just guess about thirty seconds behind  nobody contends that you bought anything other than non covered assets correct i thought there was an allegation that you were purchasing and selling covered assets the ones that were misrepresented to be backing the c d s no sir  they have not even made that argument they say that it's enough to trigger sluice that s i be bought something that was said in some sense and i have no idea what the rule is to be for our benefit were to back our d s but the only it is categorically the case that the only purchase for sale can't even be yes yes or now this is of course a significant step further then the line that already concerned some members of the court just scalia justice thomas in the late chief justice dissented in o'hagan and this is a very significant move further than even that case because the emphasis of the f c c in o'hagan was that that kind of fraud would have a tremendous effect on the market if people didn't work can be confident that the other per person on the other side of the trade had material nonpublic information now returning to the hypotheticals that the court put to my friends in the first half hour realized they're not hypotheticals they are exactly why the f c c is in that case the f c c doesn't administer salusa it is concerned that a narrower reading of in connection with will affect its ability to administer the securities laws but you put to the as you see the question ok name a case that you've brought in the past eighty years that you could not bring if the plaintiffs prevail here name a case that you hypothetically want to bring in that's exactly what i would like you to think about for a second because the last words mr goldberg are of the f c c well if you win it's going to seriously hamper the f c c in combating fall of course it wouldn't in a case like this because they aren't limited by conference securities they can deal with any security and they did bring that case have a chance to answer this exact question and so you are saying there are none and line is debatable and therefore would not have hampered them in any case in the past nor any one were likely to think of that because of my rule the f c c can't bring i can and i think that they shouldn't be allowed to bring it i'm not saying that our rule has no effect on them i'm saying it does but it's the lending cases it's the prenuptial cases it's those things that hang over the economy like a loaded it affects the s c c s ability to bring a felony prosecution despite the rule of lenity on the basis that that securities fraud the really understanding the consequence of this case i'll admit to you that the effect on salusa this is kind of a one off cas they haven't identified any other cases like this under salusa so you they are adopting a very broad meaning of in connection to kind of kill a gnat but the reason that they b s e wants to do it is because it wants an extremely broad reading of in connection with the purchase or sale they want to be able to bring a case in which someone is alleged to have purchased a non security house issued a loan on the basis of some statement about the liquidity of the fraudster and that is never a case that's ever been brought before and so it's true that we would prevent them from doing that but that's a good thing not a bad thing they've had eighteen years to say that they need that authority and they never have even if there is going to be a way in which we lose this case notwithstanding the forgoing i think it's going to be justice alito is concerned can you articulate a narrower rule in favor of the petitioners that says it was the feature that they were covered securities that was essential to the fraud i think we can say first that i not in the text of the statute right that those those words don't appear as it's in the text of the statute is in connection with which is open ended so i don't know what you get from the text of the statute well i do think that this was not in connection with the purchase or sale it certainly wasn't material to any purchase or sale but the other thing justice alito is this notion that feature of them being stocks was essential to the fraud would be true in for example a loan if i say to you i want to get a loan for one hundred thousand dollars i promise to buy from myself stocks that i could sell to repay the loan the only thing that was critical about them is that they were liquid and remember that's actually all that aside the senate is that it had question is how many nobody knows the answer to that and if you are going to rule for them the lower courts are going to face cases where a bank says we have liquid assets as well can i just be clear on your your position on the issue of whether there has to be an actual purchaser say ye s what is your answer yes there must be or no it's not essential it is not essential to our position if you agree if you agree with the s e c that there doesn't have to be a purchase or sale we still easily win that case no court has i believe it's only been farm that is not the ground on which we have pressed the case in front of you i'm not trying to make it more complicated i it is illustrative of all the rules that they need you to adopt that no court has ever adopted remember on page twenty one of their brief which is what you're being pointed to as their best case is they point to three administrators proceedings no court decision of a district court of appeals or this court and it's only on the failure to purchase point they have no cases in which the queer features of this case are present and that is you have a fraud that would not have an effect they had previously said on the regulated market whatsoever and it's merely the fact that it's for the benefit of someone else there's no court has ever adopted it and and picking up what this court said was so important in sanford and o'hagan is that it has not been the position in the past i know they have said it when they stood up today but they are the f c c assured you for decades we have taken this position it's been essential to our enforcement priorities under section ten b this case is completely different if we decided the case on that basis it really would be a one off so the f c c today has told us this would have an effect on the securities market but we would hold we we won't listen to that because of an earlier point the case  as interpreted by you they said it wouldn't be so that would be the that would be the holding where you know because the the s and c previously said it wouldn't be an effect on the securities market that's the reason for the decision no sir my point is not that when the f c c says it it becomes true we certainly don't agree with that my point is that they haven't articulated before they said the opposite and today they haven't articulated anything that is more than the kind of metaphysical go from here to here to here and it asks too much when we start from a statute that  out congress said we have this idea of a security we have this idea from the national securities markets improvements act that the states regulate non coverage securities and so we are going to say that the effect of salusa does not reach these things like the c d s that we leave to regulation by the state so this case clearly falls very easily when that within the text as being not precluded then you ask why am i going to stretch the language of the statute to say well even though these are non covered c d s because  involved i think solutions should still apply and in asking whether you should stretch the language you would say well what's the point of the phrase in connection with why did congress give it that kind of capacious reading but didn't say fraud about securities or fraud involving securities he did say in connection with and what your precedents have said over and over and over and what has been the dividing line that has prevented ten b five from swallowing all fraud is that these are misrepresentations that affect the regulated market negatively in this court that essentially says that as well would you among all the circuit courts which tests what you would i don't know that i would doubt any of them your honor because i think a lot of the make the same mistake which is they get materiality and they sneak it into the in connection with requirements so judge sutton in the six or yeah and i think if you're going to accept one test i would expect i would ask you to have the siegel test from judge sutton but i do think it's a mistake to have materiality or causation slip into the in connection with requirement i'd like to start with justice kennedy's very apt observation that this fraud here is very similar to the period of magic securities fraud where i simply a broker simply said give me your money i'll buy securities and never does and from the perspective of the defrauded party it doesn't matter whether what they get in return is a statement that says they own some securities or a statement in a feeder fund that says they have an interest in the made off fund or whether they get here a cd that they are told by the book the brochure that tells them what this is all about that it's backed by the investments in the securities they're all one in the same another thing i have to correct is it's simply not true that the returns here were not variable on the performance of the portfolio it's not really well developed in the record here but if you want to we could lodge the brochures that are used to market these things they tell these guys that their returns are variable and they could lose all of their principal because of the investments in covered securit a second thing is of course mr goldstein correctly says there are particular problems when broker dealers why about covered securities will so too there are particular problems when an unregistered investment company lies about covered securities and that's what their own complaint says was the reality of these of the stanford investment bank that it was an unregistered investment company that's interesting for two reasons one if it were a registered investment company all of its securities would be covered securities that's another way you can get within the covered security thing and so this idea that mr goldstein can proclaims this is not a covered securities fraud is simply wrong it is it was material to this fraud to make misrepresentation about purchases of covered securities without those representations that we're going to take their money and we're going to reinvest it again words from their can point in covered securities nobody's going to give their money to a bank in antigua the reason you give your money to a bank antigua is because you think it's backed by something more than a piece of paper and there's something more was purchases of covered securities on the market even if you're right about that with the commit they were in there was a will fall why couldn't they have a complaint so one of the incorrect premise and based on the insurance and regulated  if i can answer first of all i think that mr goldstein was quite prudent to not defend the fifth circuit's rationale so the fact that there are other misrepresentations should not mean that a misrepresentation in connection with purchase or sale of coverage securities is somehow ok salissa makes clear that a misrepresentation is enough now the other thing i would say very briefly is that they may have an opportunity to try to replete that in a sense is the next case i assure you that we would be arguing here where the essence of their claim is t  hold the petitioner secondarily liable for the underlying misrepresentations they have to sort of take them all but that's the next case thank you thank you counsel cases submitted