United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 15, 2016 Decided September 29, 2017

No. 15-1202

FRANCIS V. LORENZO,

PETITIONER

v.

SECURITIES AND EXCHANGE COMMISSION,

RESPONDENT

On Petition for Review of an Order of 

the Securities & Exchange Commission

Robert G. Heim argued the cause for petitioner. With 

him on the briefs were Stephanie Rapp-Tully and Steven L. 

Herrick.

Martin V. Totaro, Attorney, Securities and Exchange 

Commission, argued the cause for respondent. On the brief 

were Anne K. Small, General Counsel, Michael A. Conley, 

Solicitor, and Benjamin L. Schiffrin, Senior Litigation 

Counsel.

Before: GRIFFITH, KAVANAUGH, and SRINIVASAN, Circuit 

Judges.

Opinion for the Court filed by Circuit Judge SRINIVASAN.
2

Dissenting opinion filed by Circuit Judge KAVANAUGH.

SRINIVASAN, Circuit Judge: The Securities and 

Exchange Commission found that Francis Lorenzo sent email 

messages to investors containing misrepresentations about

key features of a securities offering. The Commission 

determined that Lorenzo’s conduct violated various securitiesfraud provisions. We uphold the Commission’s findings that 

the statements in Lorenzo’s emails were false or misleading 

and that he possessed the requisite intent. 

We cannot sustain, however, the Commission’s 

determination that Lorenzo’s conduct violated one of the 

provisions he was found to have infringed: Rule 10b-5(b). 

That rule bars the making of materially false statements in 

connection with the purchase or sale of securities. We 

conclude that Lorenzo did not “make” the false statements at 

issue for purposes of Rule 10b-5(b) because Lorenzo’s boss, 

and not Lorenzo himself, retained “ultimate authority” over

the statements. Janus Capital Grp., Inc. v. First Derivative 

Traders, 564 U.S. 135, 142 (2011). 

While Lorenzo’s boss, and not Lorenzo, thus was the 

“maker” of the false statements under Rule 10b-5(b), Lorenzo 

played an active role in perpetrating the fraud by folding the

statements into emails he sent directly to investors in his 

capacity as director of investment banking, and by doing so 

with an intent to deceive. Lorenzo’s conduct therefore 

infringed the other securities-fraud provisions he was charged 

with violating. But because the Commission’s choice of 

sanctions to impose against Lorenzo turned in some measure 

on its misimpression that his conduct violated Rule 10b-5(b), 

we set aside the sanctions and remand the matter to enable the 

Commission to reassess the appropriate penalties.
3

I. 

A.

In February 2009, Francis Lorenzo became the director of 

investment banking at Charles Vista, LLC. Charles Vista was 

a registered broker-dealer owned by Gregg Lorenzo, no 

relation to Francis. (For clarity of reference, we will refer to 

Francis Lorenzo as “Lorenzo” and will use Gregg Lorenzo’s 

first name when referring to him.)

Charles Vista’s biggest client, and Lorenzo’s only 

investment-banking client at the time, was a start-up company 

named Waste2Energy Holdings, Inc. (W2E). W2E claimed to 

have developed a “gasification” technology that could 

generate electricity by converting solid waste to gas. W2E’s 

business model relied on the technology’s living up to its 

potential. If it failed to do so, the great majority of W2E’s 

assets—the “intangibles,” in balance-sheet lingo—would have 

to be written off entirely. 

W2E’s conversion technology never materialized. In 

September 2009, W2E sought to escape financial ruin by 

offering up to $15 million in convertible debentures. 

(Debentures are “debt secured only by the debtor’s earning 

power, not by a lien on any specific asset.” BLACK’S LAW 

DICTIONARY 486 (10th ed. 2014)). Charles Vista would serve 

as the exclusive placement agent for W2E’s debenture 

offering.

W2E’s most recent SEC filing at the time, its June 3, 

2009 Form 8-K (used to notify investors of certain specified 

events), contained no indication of any possible devaluation 

of the company’s intangible assets. Rather, the form stated 

that W2E’s intangibles were worth just over $10 million as of 
4

the end of 2008. On September 9, 2009, W2E issued a

Private Placement Memorandum as a guidebook for potential 

investors in the debentures. That guidebook, like the June 

2009 Form 8-K, included no mention of any devaluation of 

the company’s intangibles. 

Following a lengthy audit, however, W2E changed its 

public tune. On October 1, 2009, the company filed an

amended Form 8-K in which it reported a total “impairment” 

of its intangible assets because “management made a 

determination that the value of the assets acquired were of no 

value.” J.A. 703. As of March 31, 2009, W2E now clarified, 

its gasification technology should have been valued at zero, 

and its total assets at only $370,552. On the same day it filed 

its amended Form 8-K, October 1, 2009, W2E also filed a

quarterly Form 10-Q in which it valued its total assets at

$660,408 as of June 30, 2009. 

Later on October 1, Lorenzo’s secretary alerted him (via 

email) about W2E’s amended Form 8-K filing. The next day, 

Lorenzo emailed all Charles Vista brokers links to both of 

W2E’s October 1 filings. On October 5, he received an email 

from W2E’s Chief Financial Officer explaining the reasons 

for “[t]he accumulated deficit we have reported.” Id. at 740. 

The CFO reiterated that W2E had written off “all of our 

intangible assets . . . of about $11 million” due to “our 

assessment of the value of what those asset[s] are worth 

today.” Id.

On October 14, Lorenzo separately emailed two potential 

investors “several key points” about W2E’s pending 

debenture offering. Id. at 794, 796. His emails, however,

omitted any mention of the wholesale devaluation of W2E’s 

intangibles. On the contrary, Lorenzo’s emails assured both 

recipients that the offering came with “3 layers of protection: 
5

(I) [W2E] has over $10 mm in confirmed assets; (II) [W2E] 

has purchase orders and LOI’s for over $43 mm in orders; 

(III) Charles Vista has agreed to raise additional monies to 

repay these Debenture holders (if necessary).” Id. One of 

Lorenzo’s messages said it had been sent “[a]t the request of 

Gregg Lorenzo,” id. at 796, and the other stated it had been 

sent “[a]t the request of Adam Spero [a broker with Charles 

Vista] and Gregg Lorenzo,” id. at 794. In both messages, 

Lorenzo urged the recipients to “[p]lease call [him] with any 

questions.” Id. at 794, 796. And he signed both messages 

with his name and title as “Vice President – Investment 

Banking.” Id.

B.

On February 15, 2013, the Commission commenced

cease-and-desist proceedings against Lorenzo, Gregg 

Lorenzo, and Charles Vista. It charged each with violating 

three securities-fraud provisions: (i) Section 17(a)(1) of the 

Securities Act of 1933, 15 U.S.C. § 77q(a)(1); (ii) Section 

10(b) of the Securities Exchange Act of 1934, 15 U.S.C. 

§ 78j; and (iii) Securities Exchange Act Rule 10b-5, 17 C.F.R. 

§ 240.10b-5. Gregg Lorenzo and Charles Vista settled the 

charges against them, but the claims against Lorenzo

proceeded to resolution before the agency.

An administrative law judge concluded that Lorenzo had 

“willfully violated the antifraud provisions of the Securities 

and Exchange Acts by his material misrepresentations and 

omissions concerning W2E in the emails.” Gregg C. 

Lorenzo, Francis V. Lorenzo, and Charles Vista, LLC, SEC 

Release No. 544, 107 SEC Docket 5934, 2013 WL 6858820, 

at *7 (Dec. 31, 2013). The ALJ deemed “[t]he falsity of the 

representations in the emails . . . staggering” and Lorenzo’s 

mental state with respect to those misstatements at least 
6

“reckless.” Id. As a result, the ALJ ordered Lorenzo to: (i) 

cease and desist from violating each securities-fraud provision

giving rise to the charges against him; (ii) forever refrain from 

participating in the securities industry in several enumerated 

respects; and (iii) pay a civil monetary penalty of $15,000. Id.

at *10. 

Lorenzo petitioned the Commission for review. 

Following “an independent review of the record,” the full 

Commission sustained the ALJ’s decision, including her

“imposition of an industry-wide bar, a cease-and-desist order, 

and a $15,000 civil penalty.” Francis V. Lorenzo, SEC 

Release No. 9762, 111 SEC Docket 1761, 2015 WL 1927763, 

at *1 (Apr. 29, 2015) (Lorenzo). The Commission found that 

Lorenzo “knew each of [the emails’ key statements] was false 

and/or misleading when he sent them.” Id. It concluded that 

the sanctions were “in the public interest to deter Lorenzo and 

others in similar positions from committing future violations.” 

Id. at *17. The Commission later denied Lorenzo’s motion 

for reconsideration.

Lorenzo filed a timely petition for review in this court. 

He challenges only the Commission’s imposition of an 

industry-wide bar and a $15,000 civil penalty, not the ceaseand-desist order. 

II.

We first consider Lorenzo’s challenges to the 

Commission’s findings that the relevant statements in his 

email messages were false or misleading and were made with 

the requisite mental state. The three pertinent statements are

the three “layers of protection” enumerated in both of 

Lorenzo’s October 14, 2009, email messages to potential 

investors about the debenture offering. Lorenzo challenges 
7

the Commission’s determination that two of the three 

statements were false or misleading, and he also challenges 

the Commission’s conclusion that he possessed the requisite 

intent with respect to all three of the statements.

With regard to his intent, establishing a violation of 

Section 17(a)(1) of the Securities Act, Section 10(b) of the 

Exchange Act, or Exchange Act Rule 10b-5 “requires proof of 

scienter.” Dolphin & Bradbury, Inc. v. SEC, 512 F.3d 634, 

639 (D.C. Cir. 2008). That standard in turn requires 

demonstrating “an intent to deceive, manipulate, or defraud.” 

Id. (quoting SEC v. Steadman, 967 F.2d 636, 641 (D.C. Cir. 

1992)). The scienter requirement can be satisfied by a 

showing of “[e]xtreme recklessness,” which exists when “the 

danger was so obvious that the actor was aware of it and 

consciously disregarded it.” Id. 

The question whether Lorenzo acted with scienter, like 

the question whether the statements were false or misleading, 

is a question of fact. Id. at 639. The Commission’s “factual 

findings are conclusive if supported by substantial evidence.” 

Seghers v. SEC, 548 F.3d 129, 132 (D.C. Cir. 2008). 

Although “[s]ubstantial evidence is more than a mere 

scintilla,” Kornman v. SEC, 592 F.3d 173, 184 (D.C. Cir. 

2010), we have repeatedly described the standard as a “very 

deferential” one, e.g., Siegel v. SEC, 592 F.3d 147, 155 (D.C. 

Cir. 2010); Dolphin & Bradbury, 512 F.3d at 639; Nat’l Ass’n 

of Sec. Dealers v. SEC, 801 F.2d 1415, 1419 (D.C. Cir. 1986). 

Applying that standard here, we conclude that the 

Commission’s findings as to falsity and scienter are supported 

by substantial evidence with regard to each of the three 

pertinent statements in Lorenzo’s emails.

 
8

A.

The first of the three statements at issue advised potential 

investors that the “Company has over $10 mm in confirmed 

assets.” J.A. 794, 796. Lorenzo does not directly dispute the 

falsity of that statement. Nor could he: by the time Lorenzo 

sent the October 14, 2009, email messages containing that 

statement, W2E had entirely written off its intangibles and 

disclosed that its remaining assets were worth far less than $1 

million. And Lorenzo himself testified that W2E “would be 

lucky to get a million” for its intangibles after they had been

marked down. Id. at 128.

As to the question of scienter, Lorenzo contends that, 

when he sent the emails, he held a good-faith belief that W2E 

had over $10 million in confirmed assets. The Commission 

concluded otherwise, and its finding of scienter is supported 

by substantial evidence. 

One of Lorenzo’s chief duties involved conducting due 

diligence on his clients, including reviewing their financial 

statements and public SEC filings. During the relevant time, 

W2E was Lorenzo’s sole investment-banking client. He 

knew that W2E’s financial situation was “horrible from the 

beginning” and that its gas-conversion technology had not 

worked as planned. Id. at 124. He also knew that he stood to 

gain seven to nine percent of any funds he raised from the 

debenture offering. 

The record shows that, when Lorenzo viewed W2E’s 

June 2009 Form 8-K, he disbelieved the Form’s valuation of 

the company’s intangible assets at $10 million. He agreed 

that the intangibles were a “dead asset” that would be “hugely 

discounted,” id. at 127-28, and that W2E would be “lucky [to] 

get a million dollars for that asset,” id. at 128-29. He also
9

thought it significant that the $10 million valuation had not 

been audited, because without such scrutiny, “there is way too

much risk for investors.” Id. at 126. He acknowledged that 

he had warned Gregg Lorenzo as early as April 2009 to 

refrain from collateralizing a debenture offering with W2E’s 

intangibles, because those assets “provided no protection” to 

investors. Id. at 159. Lorenzo understood that, if a default 

occurred, “clients would not be able to recoup their money 

based on a liquidation of this asset.” Id. He instead viewed 

the debenture offering as a “toxic convertible debt spiral.” 

Lorenzo, 2015 WL 1927763, at *5. 

Evidence concerning Lorenzo’s state of mind can also be 

gleaned from his actions in helping prepare Charles Vista’s 

Private Placement Memorandum for the debenture offering. 

On August 26, 2009, he asked W2E’s principals to value the 

company’s intangibles at $10 million in the upcoming 

Memorandum. He received no response. He broached the 

subject again on September 1, this time leaving the 

intangibles’ value blank, because he “w[asn’t] sure what [it] 

was worth anymore.” J.A. 135, 739. The final Memorandum 

assigned no concrete value to W2E’s intangibles; it instead 

divulged that the company had experienced “significant 

operating losses” and did “not expect to be profitable for at 

least the foreseeable future.” Lorenzo, 2015 WL 1927763, at 

*3. 

In its October 1 SEC filings, W2E publicly disclosed the 

wholesale write-off of its intangibles. It did so in a tri-column 

chart entitled “Goodwill and Technology,” and it followed 

that numerical presentation with a textual explanation for the 

mark-down. Lorenzo acknowledged that he read the amended 

Form 8-K on October 1 (although, according to him, 

“[p]robably not as closely as I should have”). J.A. 140. And 

he received an email from W2E’s CFO on October 5 
10

succinctly contextualizing the massive devaluation of W2E’s 

intangible assets. 

The evidence therefore supports concluding that, at least 

by October 5, Lorenzo knew that W2E’s intangibles were 

valueless. He gave testimony on the issue as follows: “Q. So 

it is fair to say . . . that on October 5, 200[9], you were aware 

that the $10 million asset had been written off by [W2E]. 

Correct? A. Okay. I will agree to that. That’s correct. Q. 

That is a fair statement? A. Yes.” Id. at 151. That admission

is difficult to reconcile with Lorenzo’s statement that he 

“unintentional[ly] miss[ed]” the import of the October 5 

email. Id. at 148. The Commission justifiably credited his 

more inculpatory rendition of events, especially in light of his 

broader, scienter-related concession: “Q. [D]id you know that 

those statements were inaccurate and misleading? A. Yes. Q. 

You knew at the time? A. At the time? I can’t sit here and 

say that I didn’t know.” Id. at 158. 

According to the Commission, “[t]hat Lorenzo could 

have looked at [W2E’s] filings, which was his job, and missed 

what was one of the most pertinent facts in them—the 

valuation of the company’s assets—is either untrue or 

extreme recklessness.” Lorenzo, 2015 WL 1927763, at *9.

The Commission considered it “at least extremely reckless” 

for Lorenzo to have sent email messages claiming that W2E 

had over $10 million in “confirmed” assets, given his “longstanding concern about the legitimacy” of those assets. Id.

We perceive no basis for setting aside the Commission’s 

conclusions as unsupported by substantial evidence.

In resisting that conclusion, Lorenzo relies in part on a 

$14 million valuation of W2E’s assets in a W2E research 

report emailed by Charles Vista’s Chief Compliance Officer 

to the firm’s brokers on the same day Lorenzo sent his 
11

pertinent emails (October 14, 2009). The Commission 

sensibly reasoned that “the mere fact that, for whatever 

unknown reason, a compliance officer sent an inaccurate 

research report internally to the firm’s brokers is neither 

analogous to, nor an excuse for, Lorenzo’s knowingly sending 

misleading emails to prospective investors.” Id. at *9 n.23.

B.

The second contested statement is the assertion in 

Lorenzo’s emails that “[t]he Company has purchase orders 

and LOI’s for over $43 mm in orders.” J.A. 794, 796. He 

maintains that the Commission erred in deeming that 

statement false or misleading. He notes that, at one point, 

Charles Vista did in fact receive a $43 million letter of intent 

from a potential customer in the Caribbean, and that W2E’s 

CEO “put a lot of confidence” in such letters. Id. at 160. But 

as the Commission rightly notes, the Caribbean letter did not 

obligate its drafter to do anything, and the transaction 

proceeded no further. By the time Lorenzo sent his emails on 

October 14, 2009, W2E had no outstanding purchase orders. 

Lorenzo’s emails nonetheless assured the recipients that W2E 

had over $43 million in “purchase orders and LOI’s.” The 

Commission thus was fully justified in finding that statement 

false or misleading. See Lorenzo, 2015 WL 1927763, at *6. 

Lorenzo also disputes the Commission’s finding of 

scienter concerning the extent of W2E’s anticipated cash 

flow. Asked whether he knew at the time that the $43 million 

figure was misleading, Lorenzo testified as follows: “I can’t 

say that with a hundred percent because they did have LOI’s 

for 43 million.” J.A. 160. As his other testimony revealed, 

however, Lorenzo understood that W2E’s sole letter of intent

was “non-binding,” a mere potentiality that the company 

“hoped would materialize.” Id. at 162. And by September 
12

2009, he “didn’t think that the 43 million LOI was ever going 

to turn into purchases.” Id. at 164. Lorenzo testified 

repeatedly to that effect. See id. at 163-64 (“Q. And by 

September 2009 you didn’t think it was ever going to come 

through, right? A. . . . That is correct.”); id. at 164 (“Q. So 

sometime in September you lost confidence that this 43 

million was ever going to happen? A. Yes.”). 

The clear implication of the statement in Lorenzo’s email 

messages was that W2E anticipated a $43 million influx of 

capital from past and future orders. Yet the record reveals 

grave doubts on Lorenzo’s part that “$43 mm in orders” (or 

any orders) would actually occur. Substantial evidence 

therefore supports the Commission’s finding of scienter as to 

that statement.

C.

The third statement at issue is the assertion in Lorenzo’s 

email messages that “Charles Vista has agreed to raise 

additional monies to repay these Debenture holders (if 

necessary).” Id. at 794, 796. Lorenzo disputes the 

Commission’s conclusion that the statement was false or 

misleading. He contends that Gregg Lorenzo could have 

made such an agreement for Charles Vista, had done so on 

prior occasions for debenture holders, and had allegedly met 

with additional brokers about raising funds for W2E. The 

Commission permissibly regarded those assertions as 

“establish[ing] only the theoretical possibility that Charles 

Vista could have raised additional money to repay investors, 

not that it had agreed to do so (as Lorenzo’s emails claimed).” 

Lorenzo, 2015 WL 1927763, at *7.

With regard to scienter, Lorenzo observes that the 

Commission included no specific citations to the record in 
13

support of its finding. It is true that, although the 

Commission quoted the evidentiary record at length, it did not 

cite the particular page numbers on which certain arguments 

and quotations appeared. But we “uphold a decision of less 

than ideal clarity if the agency’s path may reasonably be 

discerned.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. 

Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting Bowman 

Transp., Inc. v. Arkansas-Best Freight Sys., 419 U.S. 281, 286 

(1974)). That standard is readily satisfied here.

Lorenzo allowed, at least in hindsight, that “you can 

interpret this [statement] as being misleading.” J.A. 167. 

Moreover, according to his own testimony, at the time he sent 

the emails, he did not believe Charles Vista could raise 

enough money to repay debenture holders. For instance, he 

testified that, as of October 2009, “it is accurate to say that 

Charles Vista would not have the buying power or the 

resources to properly fund [W2E] in order to repay the 

debentures.” Id. at 172. Given Lorenzo’s knowledge that 

Charles Vista could not have repaid debenture holders, the 

Commission could certainly conclude that Lorenzo believed 

that no such agreement existed. As a result, substantial 

evidence supports the Commission’s finding that Lorenzo 

acted with scienter with regard to the assurance to investors

that Charles Vista had made such a promise.

III.

The Commission found that Lorenzo’s actions in 

connection with his email messages violated Section

(17)(a)(1) of the Securities Act and Section 10(b) of the 

Exchange Act, as implemented by the Commission’s Rule 

10b-5. The Rule contains three subsections, and the 

Commission concluded that Lorenzo had violated all three.
14

We now consider Lorenzo’s argument that he did not 

“make” the relevant statements within the meaning of the 

express terms of one of Rule 10b-5’s subsections, Rule 10b5(b). We agree with Lorenzo that, under the Supreme Court’s 

decision in Janus Capital Group, Inc. v. First Derivative 

Traders, 564 U.S. 135 (2011), he did not “make” the 

statements at issue for purposes of Rule 10b-5(b). Even so, 

we conclude that his status as a non-“maker” of the statements 

under Rule 10b-5(b) does not vitiate the Commission’s 

conclusion that his actions violated the other subsections of

Rule 10b-5, as well as Section 17(a)(1).

A.

Under Rule 10b-5(b), it is unlawful to “make any untrue 

statement of a material fact . . . in connection with the 

purchase or sale of any security.” 17 C.F.R. § 240.10b-5(b). 

In Janus, the Supreme Court explained what it means to 

“make” a statement within the meaning of that prohibition:

For purposes of Rule 10b-5, the maker of a 

statement is the person or entity with ultimate 

authority over the statement, including its 

content and whether and how to communicate 

it. Without control, a person or entity can 

merely suggest what to say, not “make” a 

statement in its own right. One who prepares 

or publishes a statement on behalf of another is 

not its maker.

564 U.S. at 142. “[I]n the ordinary case,” the Court 

continued, “attribution within a statement or implicit from 

surrounding circumstances is strong evidence that a statement 

was made by—and only by—the party to whom it is 

attributed.” Id. at 142-43. 
15

The Janus Court held that an investment adviser that had 

assisted in preparing a mutual fund’s prospectuses did not 

“make” the statements contained therein, because the adviser

lacked “ultimate control” over the statements’ content and 

dissemination. Id. at 148. The investment adviser had merely 

“participate[d] in the drafting of a false statement”—“an 

undisclosed act preceding the decision of an independent 

entity to make a public statement.” Id. at 145. The Court 

illustrated the operation of its test through the following

analogy: “Even when a speechwriter drafts a speech, the 

content is entirely within the control of the person who 

delivers it. And it is the speaker who takes credit—or 

blame—for what is ultimately said.” Id. at 143. 

Under the Janus test, a person cannot have “made” a 

statement if he lacked ultimate authority over what it said and

whether it was said, including if he prepared or published it 

on behalf of another. In light of that understanding, we find 

that Lorenzo was not the “maker” of the pertinent statements 

set out in the email messages he sent to potential investors, 

even viewing the record in the light most favorable to the 

Commission. 

Lorenzo contends that he sent the email messages at the 

behest of his boss, Gregg Lorenzo, and that Gregg Lorenzo 

supplied the content of the false statements, which Lorenzo 

copied and pasted into the messages before distributing them. 

As a result, Lorenzo contends, Gregg Lorenzo (and not 

Lorenzo himself) was the “maker” of the statements under 

Janus. The Commission found otherwise, concluding that 

Lorenzo “was ultimately responsible for the emails’ content 

and dissemination.” Lorenzo, 2015 WL 1927763, at *10. We 

cannot sustain the Commission’s conclusion that Lorenzo had 

“ultimate authority” over the false statements under Janus.
16

564 U.S. at 142. Gregg Lorenzo, and not Lorenzo, retained 

ultimate authority.

Voluminous testimony established that Lorenzo 

transmitted statements devised by Gregg Lorenzo at Gregg 

Lorenzo’s direction. For instance, Lorenzo said: “I cut and 

paste[d] an e-mail and sent it to [investors],” J.A. 153; “I was 

asked to send these e-mails out by Gregg Lorenzo,” id. at 156;

and “I cut and pasted and sent it,” id. at 157. He also stated: 

“I remember getting—getting the e-mail address from [Gregg 

Lorenzo] and then cut and past[ed] this—this thing and sent 

it,” id. at 199; “[Gregg Lorenzo] gave me the e-mail address, I 

typed it into the ‘to’ column and cut and pasted this—the

content and sent it out,” id.; “My boss asked me to send these 

e-mails out and I sent them out,” id. at 200; “[I] sent these emails out at the request of my superior,” id. at 208; and “I 

simply was asked to send the e-mail out,” id. at 208-09.

In the face of that consistent testimony, the Commission 

anchored its conclusion almost entirely in the following 

remark from Lorenzo: “If memory serves me—I think I 

authored it and then it was approved by Gregg and Mike 

[Molinaro, Charles Vista’s Chief Compliance Officer].” J.A. 

155. That assertion, even apart from its equivocation, must be 

read alongside the rest of Lorenzo’s testimony. Immediately

before and after uttering that line, Lorenzo explained that “I 

cut and paste[d] an e-mail and sent it” and “I cut and pasted 

and sent it.” Id. at 153, 157. And he consistently testified to 

the same effect throughout. In that light, Lorenzo’s remark 

that he “authored” the emails cannot bear the weight given it 

by the Commission. Rather, the statement is fully consistent 

with Lorenzo’s repeated account that, while he produced the 

email messages for final distribution from himself to the 

investors—and in that sense “authored” the messages—he 

populated the messages with content sent by Gregg Lorenzo.
17

In the line of testimony on which the Commission relies, 

moreover, Lorenzo stated that, before he sent the messages,

they were “approved” by Gregg Lorenzo. That observation 

reinforces Gregg Lorenzo’s ultimate authority over the 

substance and distribution of the emails: Gregg Lorenzo 

asked Lorenzo to send the emails, supplied the central 

content, and approved the messages for distribution. To be 

sure, Lorenzo played an active role in perpetrating the fraud

by producing the emails containing the false statements and 

sending them from his account in his capacity as director of 

investment banking (and doing so with scienter). But under 

the test set forth in Janus, Gregg Lorenzo, and not Lorenzo,

was “the maker” of the false statements in the emails. 564 

U.S. at 142.

The Commission’s remaining observations do not alter 

our conclusion. For instance, the Commission noted that 

Lorenzo “put his own name and direct phone number at the 

end of the emails, and he sent the emails from his own 

account.” Lorenzo, 2015 WL 1927763, at *10. That sort of 

signature line, however, can often exist when one person 

sends an email that “publishes a statement on behalf of 

another,” with the latter person retaining “ultimate authority 

over the statement.” Janus, 564 U.S. at 142.

The Commission also referenced Lorenzo’s testimony 

that “he did not recall ever discussing either of the emails or 

their subject matter with Gregg Lorenzo.” Lorenzo, 2015 WL 

1927763, at *10. That comment, however, is consistent with 

the understanding that Lorenzo played a minimal role in 

devising the emails’ false statements. And although the email 

messages said that the Investment Banking Division—which 

Lorenzo headed—was “summariz[ing] several key points” 

about the debenture offering, J.A. 794, 796, the content of 

those points evidently had been supplied by Gregg Lorenzo. 
18

The emails, moreover, began by stating that they were being 

sent at Gregg Lorenzo’s request. Lorenzo testified elsewhere 

that Gregg Lorenzo had remarked, “I want this [to] come 

from our investment banking division. Can you send this out 

for me?” Id. at 217.

Under the Supreme Court’s decision in Janus, in short, 

Lorenzo cannot be considered to have been “the maker” of the 

statements in question for purposes of Rule 10b-5(b)—i.e., 

“the person . . . with ultimate authority” over them. 564 U.S. 

at 142. That person was Gregg Lorenzo, and not (or not also) 

Lorenzo.

B.

Lorenzo next argues that, if he was not “the maker” of 

the false statements at issue within the meaning of Rule 10b5(b), his conduct necessarily also falls outside the prohibitions 

of Exchange Act Section 10(b), Rules 10b-5(a) and (c), and 

Securities Act Section 17(a)(1). The Commission concluded 

otherwise, incorporating by reference its reasoning in John P. 

Flannery & James D. Hopkins, SEC Release No. 3981, 110 

SEC Docket 2463, 2014 WL 7145625 (Dec. 15, 2014), 

vacated, Flannery v. SEC, 810 F.3d 1 (1st Cir. 2015) 

(rejecting the Commission’s key factual determinations on 

substantial-evidence grounds). The Commission determined 

that, “[i]ndependently of whether Lorenzo’s involvement in 

the emails amounted to ‘making’ the misstatements for 

purposes of Rule 10b-5(b), he knowingly sent materially 

misleading language from his own email account to 

prospective investors,” thereby violating those other 

provisions. Lorenzo, 2015 WL 1927763, at *11. 

We sustain the Commission’s conclusion to that effect. 

At least in the circumstances of this case, in which Lorenzo 
19

produced email messages containing false statements and sent

them directly to potential investors expressly in his capacity 

as head of the Investment Banking Division—and did so with 

scienter—he can be found to have infringed Section 10(b), 

Rules 10b-5(a) and (c), and Section 17(a)(1), regardless of 

whether he was the “maker” of the false statements for 

purposes of Rule 10b-5(b). 

1. Rules 10b-5(a) and (c), along with Sections 10(b) and 

17(a)(1)—all unlike Rule 10b-5(b)—do not speak in terms of 

an individual’s “making” a false statement. Indeed, “[t]o 

make any . . . statement” was the critical language construed 

in Janus: what the Court described as the “phrase at issue.”

564 U.S. at 142 (alteration in original) (quoting 17 C.F.R. 

§ 240.10b-5(b)). That language appears in Rule 10b-5(b), but 

not in the other provisions Lorenzo was found to have 

violated.

In particular, Rule 10b-5(a) prohibits “employ[ing] any 

device, scheme, or artifice to defraud . . . in connection with 

the purchase or sale of any security.” 17 C.F.R. § 240.10b5(a). And Rule 10b-5(c) bars “engag[ing] in any act, practice, 

or course of business which operates or would operate as a 

fraud or deceit upon any person . . . in connection with the 

purchase or sale of any security.” Id. § 240.10b-5(c). 

Consequently, Rule 10b-5(b) “specifies the making of an 

untrue statement of a material fact and the omission to state a 

material fact. The first and third subparagraphs are not so 

restricted.” Affiliated Ute Citizens of Utah v. United States, 

406 U.S. 128, 152-53 (1972). 

Nor are Securities Act Section 17(a)(1) and Exchange 

Act Section 10(b). Section 17(a)(1) makes it unlawful “to 

employ any device, scheme, or artifice to defraud” in offering 

or selling a security. 15 U.S.C. § 77q(a)(1). And Section 
20

10(b) forbids “us[ing] or employ[ing] . . . any manipulative or 

deceptive device or contrivance” in contravention of rules 

prescribed by the Commission. 15 U.S.C. § 78j(b).

Here, Lorenzo, acting with scienter (i.e., an intent to 

deceive or defraud, or extreme recklessness to that effect), 

produced email messages containing three false statements 

about a pending offering, sent the messages directly to 

potential investors, and encouraged them to contact him 

personally with any questions. Although Lorenzo does not 

qualify as the “maker” of those statements under Janus

because he lacked ultimate authority over their content and 

dissemination, his own active “role in producing and sending 

the emails constituted employing a deceptive ‘device,’ ‘act,’ 

or ‘artifice to defraud’ for purposes of liability under Section 

10(b), Rule 10b-5(a) and (c), and Section 17(a)(1).” Lorenzo, 

2015 WL 1927763, at *11.

Lorenzo’s conduct fits comfortably within the ordinary 

understanding of those terms. Indeed, he presents no 

argument that his actions fail to satisfy the statutory and 

regulatory language. He does not examine—or even 

reference—the text of those provisions in arguing that they 

should be deemed not to apply to his conduct.

Lorenzo does not contend before us, for instance, that he 

simply passed along information supplied by Gregg Lorenzo 

without pausing to think about the truth or falsity of what he 

was sending to investors. If those were the facts, he might 

attempt to argue that he cannot be considered to have 

“employed” any fraudulent device or artifice, or “engaged” in 

any fraudulent or deceitful act, within the meaning of Rules 

10b-5(a) and (c), and of Sections 10(b) and 17(a)(1). But 

while Lorenzo argued before the Commission that he 

produced and sent the emails at Gregg Lorenzo’s request 
21

without giving them thought, the Commission found 

“implausible” any suggestion that he merely passed along the 

messages in his own name without thinking about their 

content. Lorenzo, 2015 WL 1927763, at *9. Lorenzo does 

not challenge that finding here.

We therefore consider the case on the understanding that 

Lorenzo, having taken stock of the emails’ content and having 

formed the requisite intent to deceive, conveyed materially 

false information to prospective investors about a pending 

securities offering backed by the weight of his office as 

director of investment banking. On that understanding, the 

language of Sections 10(b) and 17(a)(1), and of Rules 10b5(a) and (c), readily encompasses Lorenzo’s actions.

2. Instead of presenting any argument that his conduct 

falls outside the language of those provisions, Lorenzo asserts 

that, if he could be found to have violated the provisions, the 

decision in Janus would effectively be rendered meaningless. 

See SEC v. Kelly, 817 F. Supp. 2d 340, 344 (S.D.N.Y. 2011). 

He notes the Janus Court’s interest in interpreting the term 

“make” in a manner that would avoid undermining the 

Court’s previous holding that private actions under Rule 10b5 cannot be premised on conceptions of secondary (i.e., 

aiding-and-abetting) liability. See Janus, 564 U.S. at 143 

(discussing Central Bank of Denver, N.A. v. First Interstate 

Bank of Denver, N.A., 511 U.S. 164 (1994)).

As the Court explained in Janus, whereas the 

Commission can bring actions under Rule 10b-5 based on an 

aiding-and-abetting theory, private parties—after Central 

Bank—cannot. Id. The Janus Court reasoned that a “broader 

reading of ‘make,’” encompassing “persons or entities 

without ultimate control over the content of a statement,” 

could mean that “aiders and abettors would be almost 
22

nonexistent.” Id. That result, the Court believed, would have 

undercut an implicit understanding from Central Bank: that 

“there must be some distinction between those who are 

primarily liable . . . and those who are secondarily liable.” Id.

at 143 n.6. The same considerations, Lorenzo contends, 

should weigh in favor of concluding that his conduct did not 

violate Section 10(b), Rules 10b-5(a) and (c), and Section 

17(a)(1). We are unpersuaded. 

To the extent the Janus Court’s concerns about aidingand-abetting liability in private actions under Rule 10b-5(b)

should inform our interpretation of those other four 

provisions, the conduct at issue in Janus materially differs

from Lorenzo’s actions in this case. Janus involved an 

investment adviser that initially drafted false statements 

which an independent entity subsequently decided to 

disseminate to investors in its own name. The investment 

adviser’s role in originally devising the statements was 

unknown to the investors who ultimately received them. The 

Court thus described the investment adviser’s conduct as “an 

undisclosed act preceding the decision of an independent 

entity to make a public statement.” 564 U.S. at 145. 

In this case, by contrast, Lorenzo’s role was not 

“undisclosed” to investors. The recipients were fully alerted 

to his involvement: Lorenzo sent the emails from his account 

and under his name, in his capacity as director of investment 

banking at Charles Vista. While Gregg Lorenzo supplied the 

content of the false statements for inclusion in Lorenzo’s 

email messages, Lorenzo effectively vouched for the emails’ 

contents and put his reputation on the line by listing his 

personal phone number and inviting the recipients to “call 

with any questions.” J.A. 794, 796. Nor did the 

dissemination of the false statements to investors result only 

from the separate “decision of an independent entity.” Janus, 
23

564 U.S. at 145. Lorenzo himself communicated with 

investors, directly emailing them misstatements about the

debenture offering.

Unlike in Janus, therefore, the recipients of Lorenzo’s 

emails were not exposed to the false information only through

the intervening act of “another person.” Id. For the same 

reasons, Lorenzo’s conduct also differs from the actions 

considered in Stoneridge Investment Partners, LLC v. 

Scientific-Atlanta, Inc., 552 U.S. 148 (2008). There, the 

Supreme Court held that parties who allegedly played a role 

in a scheme to make false statements to investors could not be 

held liable in a private action under Rule 10b-5. The Court 

explained that the parties’ acts “were not disclosed to the 

investing public” and they “had no role” in “disseminating” 

the misstatements in question. Id. at 155, 161. Lorenzo, 

unlike the defendants in Janus and Stoneridge, transmitted 

misinformation directly to investors, and his involvement was 

transparent to them.

As a result, insofar as the Janus Court declined to bring 

the investment adviser’s actions in that case within the fold of 

Rule 10b-5 because doing so might reach too many persons 

fairly considered to be aiders and abettors, the same is not true 

of Lorenzo’s distinct conduct in this case. The Court’s 

concern that “aiders and abettors would be almost 

nonexistent” if a private action under Rule 10b-5 reached “an 

undisclosed act preceding the decision of an independent 

entity to make a public statement,” Janus, 564 U.S. at 143, 

145, need not obtain in the case of a person’s self-attributed

communications sent directly to investors (and backed by 

scienter). Lorenzo’s actions thus can form the basis of a 

violation of Rules 10b-5(a) and (c) (as well as Sections 10(b) 

and 17(a)(1)) while still leaving ample room for “distinction

between those who are primarily liable . . . and those who are 
24

secondarily liable.” Id. at 143 n.6; see Stoneridge, 552 U.S. at 

166 (“[T]he implied right of action in § 10(b) continues to 

cover secondary actors who commit primary violations.”

(citing Central Bank, 511 U.S. at 191)).

3. Lorenzo intimates more broadly that actions involving 

false statements must fit within Rule 10b-5(b) and cannot be 

brought separately under Rules 10b-5(a) or (c) (or Section 

17(a)(1)). We know of no blanket reason, however, to treat 

the various provisions as occupying mutually exclusive 

territory, such that false-statement cases must reside 

exclusively within the province of Rule 10b-5(b). And any 

suggestion that the coverage of Rule 10b-5(b) must be distinct 

from that of Rules 10b-5(a) and (c) presumably would mean 

that each of the latter two provisions likewise must occupy 

entirely separate ground from one another. In our view, 

however, the provisions’ coverage may overlap in certain 

respects.

Significantly, the Supreme Court recently described Rule 

10b-5 in a manner confirming that conduct potentially subject 

to Rule 10b-5(b)’s bar against making false statements can 

also fall within Rule 10b-5(a)’s more general prohibition 

against employing fraudulent devices: the Court explained 

that “Rule 10b-5 . . . forbids the use of any ‘device, scheme, 

or artifice to defraud’ (including the making of any ‘untrue 

statement of material fact’ or any similar ‘omi[ssion]’).” 

Chadbourne & Parke LLP v. Troice, 134 S. Ct. 1058, 1063 

(2014) (emphasis added). 

The Court has also held that, although Section 14 of the 

Exchange Act establishes “a complex regulatory scheme 

covering proxy solicitations,” the inapplicability of Section 14 

to false statements in proxy materials does not preclude the 

application of Rule 10b-5 to the same statements. SEC v. 
25

Nat’l Sec., Inc., 393 U.S. 453, 468 (1969). “The fact that 

there may well be some overlap is neither unusual nor 

unfortunate,” the Court explained. Id. Here, correspondingly, 

Rules 10b-5(a) and (c), as well as Sections 10(b) and 17(a)(1), 

may encompass certain conduct involving the dissemination 

of false statements even if the same conduct lies beyond the 

reach of Rule 10b-5(b).

In accordance with that understanding, a number of 

decisions have held that securities-fraud allegations involving

misstatements can give rise to liability under related

provisions even if the conduct in question does not amount to 

“making” a statement under Janus. See, e.g., SEC v. Big 

Apple Consulting USA, Inc., 783 F.3d 786, 795-96 (11th Cir. 

2015); SEC v. Monterosso, 756 F.3d 1326, 1334 (11th Cir. 

2014); SEC v. Benger, 931 F. Supp. 2d 904, 905-06 (N.D. Ill. 

2013); SEC v. Familant, 910 F. Supp. 2d 83, 93-95 (D.D.C. 

2012); SEC v. Stoker, 865 F. Supp. 2d 457, 464-65 (S.D.N.Y. 

2012). We reach the same conclusion here with respect to the 

role played by Lorenzo in disseminating the false statements 

in his email messages to investors.

4. Our dissenting colleague would find that Lorenzo’s 

actions did not violate Rules 10b-5(a) or (c), or Sections 10(b) 

or 17(a)(1). He advances two reasons for reaching that 

conclusion, each of which, in our respectful view, is 

misconceived.

a. The dissent’s central submission is that Lorenzo acted 

without any intent to deceive or defraud. As our colleague

sees things, Lorenzo simply transmitted false statements

supplied by Gregg Lorenzo without giving any thought to 

their content. See infra at 1, 6 (Kavanaugh, J., dissenting). 

And Lorenzo ostensibly paid no attention to the content of the 

statements he sent even though: he included the statements in 
26

messages he produced for distribution from his own email 

account; he sent the statements in his name and capacity as 

investment banking director; and he encouraged the recipients 

to contact him personally with questions about the content. 

Under our colleague’s understanding, that is, Lorenzo offered 

to answer any questions about his emails even though he had 

supposedly paid no attention to what they said.

In adopting that understanding, the dissent relies on a 

finding by the ALJ that Lorenzo sent the emails without 

thinking about their contents. But the Commission, as we 

have noted, rejected the ALJ’s conclusion to that effect as 

“implausible” in the circumstances. Lorenzo, 2015 WL 

1927763, at *9. In our colleague’s view, the court should 

accept the ALJ’s finding, notwithstanding the Commission’s 

rejection of it, because the ALJ could assess Lorenzo’s

credibility as a witness.

The dissent’s (and ALJ’s) factual understanding, 

however, is contradicted by Lorenzo’s own account of his 

mental state to this court. Lorenzo raises no challenge to the 

Commission’s rejection of any notion that he paid no heed to 

his messages’ content. What is more, his argument on the 

issue of scienter rests on his affirmative contemplation—

indeed, his ratification—of the content of his emails.

Unlike in his arguments before the ALJ and Commission, 

Lorenzo, in this court, does not take the position that he 

simply passed along statements supplied by Gregg Lorenzo 

without thinking about them. Such a suggestion appears 

nowhere in his briefing. To the contrary, he argues that, “[a]t 

the time the email was sent [he] believed the statements to be 

true and he did not act with scienter.” Pet’r Reply Br. 6 

(emphasis added). He further asserts that he “had a good 

faith belief in the veracity of the statements contained in the 
27

email that was drafted by Gregg Lorenzo.” Pet’r Opening Br. 

18 (emphasis added); id. at 22 (“Petitioner had a good faith 

belief in the accuracy of the statements contained in the 

email.”). He then attempts to explain why he could have 

believed the truth of the materially misleading statements 

contained in his email messages, arguments that we have 

already rejected in affirming the Commission’s findings of 

scienter. See supra Part II.

For present purposes, what matters is that a person cannot 

have “believed statements to be true” at the time he sent them, 

or possessed a “good faith belief in their veracity,” if he had 

given no thought to their content in the first place. In that 

light, our dissenting colleague relies on an account of 

Lorenzo’s state of mind that stands in opposition to Lorenzo’s 

account to us of his own state of mind. (As for our 

colleague’s theory that Lorenzo could have formed a belief 

about the statements’ truthfulness without even reading them,

based purely on his trust of Gregg Lorenzo, see infra at 7 n.1 

(Kavanaugh, J., dissenting), even if we assume that theory

were viable as a conceptual matter, Lorenzo’s arguments to us 

about his belief in the statements’ truth rest solely on their 

content, not on any trust-without-verifying level of confidence 

in Gregg Lorenzo’s veracity. Indeed, he testified that, at least 

as of November 2009, “there is no way on God’s green earth 

[he] thought Gregg Lorenzo was an honest guy.” J.A. 176.)

Perhaps Lorenzo concluded he could not overcome the 

Commission’s assessment that it would be implausible to 

suppose he had blinded himself to the statements’ content 

before sending them to investors and offering to answer any 

questions about them. Or perhaps he determined that, insofar 

as he did so, he would have difficulty denying that he had 

acted with extreme recklessness—and therefore with 

scienter—in any event. Regardless, Lorenzo now takes the 
28

position that he took stock of the content of the statements, so 

much so that he formed a belief as to their truthfulness. And 

we are in no position to embrace an understanding of 

Lorenzo’s mental state that is disclaimed by Lorenzo himself. 

To be clear, the point here is not that Lorenzo failed to 

preserve an argument about scienter. Lorenzo devoted 

considerable attention to the issue of scienter in his briefing. 

But Lorenzo’s arguments on the issue contain no suggestion 

that he sent his emails without giving thought to their 

contents. He instead contends he did think about the contents

(and reasonably believed them to be truthful). In those 

circumstances, we do not so much defer to the Commission’s 

assessment of Lorenzo’s state of mind over the ALJ’s finding

that Lorenzo gave no thought to his emails’ content. Rather, 

we accede to Lorenzo’s account of his own mental state, 

which is incompatible with the finding of the ALJ.

But what if Lorenzo in fact had sought to argue to us, in 

concert with the ALJ’s finding, that he gave no thought to the 

content of his email messages when sending them? In that 

event—which, again, is not the situation we face—the issue 

for us would have been whether the Commission’s contrary 

conclusion is supported by substantial evidence, not whether 

the Commission or the ALJ has the better of the dispute

between them on the matter. See, e.g., Kay v. FCC, 396 F.3d 

1184, 1189 (D.C. Cir. 2005); Swan Creek Communications, 

Inc. v. FCC, 39 F.3d 1217, 1221 (D.C. Cir. 1994); see also 

Universal Camera Corp. v. NLRB, 340 U.S. 474, 496 (1951).

The Commission’s finding meets the deferential, 

substantial-evidence standard. After all, Lorenzo’s emails 

marked the only time he communicated directly with 

prospective investors, the emails concerned a securities 

offering by his sole investment banking client, the emails said 
29

he would personally answer questions about their content, and 

the emails carried his professional imprimatur as director of 

investment banking—all of which support the Commission’s 

rejection of the idea that Lorenzo simply sent his emails 

without taking any stock of what they said.

b. Even accepting that Lorenzo thought about the 

statements in his emails and sent them with an intent to 

deceive, the dissent would still conclude that Lorenzo’s 

conduct falls outside the ambit of Rules 10b-5(a) and (c), and 

Sections 10(b) and 17(a)(1). See infra at 9 (Kavanaugh, J., 

dissenting). Our colleague grounds that conclusion in his 

agreement with the proposition put forward by certain other

courts of appeals to the effect that “scheme liability”—i.e., the 

conduct prohibited by Rules 10b-5(a) and (c)—requires 

something more than false or misleading statements. See 

Pub. Pension Fund Grp. v. KV Pharma. Co., 679 F.3d 972, 

987 (8th Cir. 2012); WPP Luxembourg Gamma Three Sari v. 

Spot Runner, Inc., 655 F.3d 1039, 1057-58 (9th Cir. 2011); 

Lentell v. Merill Lynch & Co., 396 F.3d 161, 177 (2d Cir. 

2005). 

Our colleague appears to read those decisions’ embrace

of that proposition to rest on the need to maintain a distinction 

between primary liability and secondary liability under Rule 

10b-5. We have described the Janus Court’s reliance on that 

concern and explained our conclusion that it does not carry 

the day in the specific circumstances of Lorenzo’s conduct. 

See supra Part III.B.2. 

Moreover, we do not read the referenced courts of 

appeals’ decisions to rest on concerns about preserving a 

distinction between primary and secondary liability. None of 

those decisions discusses (or mentions) the concepts of 

primary and secondary liability or any need to maintain a 
30

separation between them. Indeed, two of the three decisions 

postdate Janus, yet neither cites Janus, much less invokes

Janus’s concerns with construing the scope of Rule 10b-5(b)

in a manner that would encompass too many aiders-andabettors.

In addition, it is far from clear that the rule articulated by 

those decisions could suitably be grounded in concerns with 

preserving a distinction between primary and secondary 

liability. According to the decisions, a “defendant may only 

be liable as part of a fraudulent scheme based upon 

misrepresentations and omissions under Rules 10b-5(a) or (c) 

when the scheme also encompasses conduct beyond those 

misrepresentations or omissions.” WPP Luxembourg, 655 

F.3d at 1057; see KV Pharma., 679 F.3d at 987; Lentell, 396 

F.3d at 177. That understanding would be overinclusive if the 

objective in fact were to assure that aiders-and-abettors are 

not held primarily liable under those provisions.

Consider, for instance, the facts of WPP Luxembourg. 

There, the plaintiffs alleged sufficient facts to make out a 

claim of materially misleading omissions under Rule 10b5(b). 655 F.3d at 1051. There was no question that the 

defendants faced primary (not secondary) liability if the facts 

as pleaded were proved. Id. Yet the court held that the

defendants could not be liable under Rules 10b-5(a) or (c) 

because there were no allegations against them apart from

misstatements or omissions. Id. at 1057-58. The court’s 

requirement that plaintiffs prove more than misstatements 

thus barred liability under those provisions even though there 

could have been no concerns about blurring the distinction 

between primary and secondary liability. Perhaps it is 

unsurprising, then, that, while Lorenzo relies on the 

importance of maintaining the primary-secondary liability 
31

distinction, he makes no reference to WPP Luxembourg or the 

other two decisions in his briefing.

For those reasons, we disagree with our dissenting

colleague’s suggestion that our holding conflicts with those 

decisions with regard to the primary-secondary liability 

distinction. See infra at 9 (Kavanaugh, J., dissenting). We do 

not understand those decisions to turn on that distinction.

Those decisions do generally state, however, that Rules 

10b-5(a) and (c) require something more than misstatements. 

But they did not have occasion to elaborate on that 

understanding to any significant extent—including, 

importantly for purposes of this case, whether the same 

interpretation would extend to Section 17(a)(1). Insofar as 

those courts of appeals would find Lorenzo’s actions to lie 

beyond the reach of those provisions, we read the provisions 

differently. Lorenzo’s particular conduct, as we have 

explained, fits comfortably within the language of Rules 10b5(a) and (c), along with that of Sections 10(b) and 17(a)(1).

Finally, we briefly respond to our dissenting colleague’s 

belief that there is an incongruity in deciding both that 

Lorenzo was not a maker of the false statements under Rule 

10b-5(b) and that he nonetheless employed a fraudulent 

device and engaged in a fraudulent act under Rules 10b-5(a) 

and (c) and Section 17(a)(1). See infra at 11 (Kavanaugh, J., 

dissenting). Those combined decisions, in our view, follow

naturally from the terms of the provisions. Lorenzo was not 

the “maker” of the false statements because he lacked

ultimate authority over them. Still, he “engaged” in a 

fraudulent “act” and “employed” a fraudulent “device” when, 

with knowledge of the statements’ falsity and an intent to 

deceive, he sent the statements to potential investors carrying

his stamp of approval as investment banking director. One 
32

can readily imagine persons whose ministerial acts in 

connection with false statements would fail to qualify either

as “making” the statements or as “employing” any fraudulent 

device. Lorenzo, in our view, is not such a person.

IV.

Lorenzo’s final challenge concerns the sanctions imposed 

against him. The Commission permanently barred Lorenzo 

“from association with any broker, dealer, investment adviser, 

municipal securities dealer, municipal advisor, transfer agent, 

or nationally recognized statistical rating organization and 

from participating in an offering of penny stocks.” Lorenzo, 

2015 WL 1927763, at *17. The Commission also ordered 

him to pay a $15,000 monetary penalty. Lorenzo argues that 

those penalties are arbitrary and capricious for various 

reasons, including that they are disproportional to the severity 

of his misconduct and to the sanctions imposed in similar

cases.

We decline to reach the merits of Lorenzo’s challenges. 

The Commission chose the level of sanctions based in part on 

a misimpression that Lorenzo was the “maker” of false 

statements in violation of Rule 10b-5(b). Because we have 

now overturned the Commission’s finding of liability under 

Rule 10b-5(b), we vacate the sanctions and remand the matter 

to enable the Commission to reconsider the appropriate 

penalties. 

We have no assurance that the Commission would have 

imposed the same level of penalties in the absence of its 

finding of liability for making false statements under Rule 

10b-5(b). The Commission expressly grounded its sanctions 

on its perceptions about the “egregiousness of Lorenzo’s 

conduct” and the “degree of scienter involved,” as well as the 
33

need to deter others “from engaging in similar misconduct.” 

Id. at *12, *14. But the Commission operated under the 

assumption that Lorenzo devised, and had ultimate authority 

over, the substance of the false statements contained in the 

email messages he sent to investors. That assumption, as we 

have concluded, is unsupported by the record evidence. The 

Commission in fact specifically based its sanctions in some 

measure on a belief that Lorenzo improperly sought to “shift 

blame” by asserting “that he sent the emails at Gregg 

Lorenzo’s direction.” Id. at *13. But as the record indicates,

that is essentially what happened.

Because we “cannot be certain what role, if any,” the 

Commission’s misperception that Lorenzo was the “maker” 

of the false statements ultimately played in its choice of 

sanctions, “we must remand” to enable it to reassess the 

appropriate penalties. Alliance for Cannabis Therapeutics v. 

DEA, 930 F.2d 936, 940-41 (D.C. Cir. 1991). When the 

Commission does so under a correct understanding about the 

nature of Lorenzo’s misconduct, it can assess “whether the 

sanction is out of line with the agency’s decisions in other 

cases” involving comparable misconduct—which, as we have 

observed, is one consideration informing review of penalties 

for arbitrariness and capriciousness. Collins v. SEC, 736 F.3d 

521, 526 (D.C. Cir. 2013).

The Commission, in this regard, notes our previous 

observation that the “Commission is not obligated to make its 

sanctions uniform, so we will not compare this sanction to 

those imposed in previous cases.” Geiger v. SEC, 363 F.3d 

481, 488 (D.C. Cir. 2004) (citing Butz v. Glover Livestock 

Comm’n Co., 411 U.S. 182, 186-87 (1973)). In that vein, we 

have explained that a mere absence of uniformity will not 

necessarily render a particular action “unwarranted in law,” 

id. at 488, or “unwarranted as a matter of policy,” Kornman, 
34

592 F.3d at 188. But we have never declined to compare 

past-and-present Commission sanctions in the context of an 

arbitrary-and-capricious challenge. In fact, our decision in 

Collins clarified that such a challenge may be brought to 

review the propriety of the Commission’s choice of sanction 

in a given case as compared with sanctions in comparable 

situations. See 736 F.3d at 526.

* * * * *

For the foregoing reasons, we grant the petition for 

review in part, vacate the sanctions imposed by the 

Commission, and remand the matter for further consideration.

So ordered.
KAVANAUGH, Circuit Judge, dissenting: Suppose you 

work for a securities firm. Your boss drafts an email message 

and tells you to send the email on his behalf to two clients. You

promptly send the emails to the two clients without thinking

too much about the contents of the emails. You note in the 

emails that you are sending the message “at the request” of your 

boss. It turns out, however, that the message from your boss to 

the clients is false and defrauds the clients out of a total of 

$15,000. Your boss is then sanctioned by the Securities and 

Exchange Commission (as is appropriate) for the improper 

conduct. 

What about you? For sending along those emails at the 

direct behest of your boss, are you too on the hook for the 

securities law violation of willfully making a false statement or 

willfully engaging in a scheme to defraud? 

According to the SEC, the answer is yes. And the SEC 

concludes that your behavior – in essence forwarding emails

after being told to do so by your boss – warrants a lifetime 

suspension from the securities profession, on top of a monetary 

fine. 

That is what happened to Frank Lorenzo in this case. The 

good news is that the majority opinion vacates the lifetime 

suspension. The bad news is that the majority opinion –

invoking a standard of deference that, as applied here, seems 

akin to a standard of “hold your nose to avoid the stink” –

upholds much of the SEC’s decision on liability. I would 

vacate the SEC’s conclusions as to both sanctions and liability. 

I therefore respectfully dissent. 

* * *

The SEC initiated an enforcement action against Frank 

Lorenzo and his boss. The boss eventually reached a 

settlement agreement with the SEC. Apparently thinking he 
2

had done little wrong by merely sending emails to two clients 

at the request of his boss, Lorenzo did not settle.

The case then proceeded through three stages: a trial 

before an SEC administrative law judge, review by the 

Commission itself, and then review by this Court. To 

understand my disagreement with the majority opinion, it is 

necessary to describe all three acts in this drama. 

Act One: The Administrative Law Judge

The case proceeded to trial before an administrative law 

judge. This was not your usual trial. Surprisingly, the SEC did 

not present testimony from Lorenzo’s boss or from anyone else 

at the securities firm where Lorenzo worked. Instead, only

Lorenzo testified about the extent of his involvement in 

drafting and sending the emails.

After hearing Lorenzo’s testimony and weighing his 

credibility, the judge concluded that Lorenzo’s boss had 

“drafted” the emails in question and that Lorenzo’s boss had 

“asked” Lorenzo to send the emails to two clients. ALJ Op. at 

5 (Dec. 31, 2013), J.A. 906. The judge also concluded that 

Lorenzo did not read the text of the emails and that Lorenzo

“sent the emails without even thinking about the contents.” Id. 

at 7, J.A. 908; see id. at 9, J.A. 910 (“Had he taken a minute to 

read the text . . .”). Furthermore, the judge noted that the emails 

themselves expressly stated that they were being sent at “the 

request” of Lorenzo’s boss. Id. at 5, J.A. 906. 

Those factual findings were very favorable to Lorenzo and 

should have cleared Lorenzo of any serious wrongdoing under 

the securities laws. At most, the judge’s factual findings may 

have shown some mild negligence on Lorenzo’s part. The 

judge, however, went much further than that. The judge 
3

somehow concluded that those findings of fact demonstrated

that Lorenzo willfully violated the securities laws – meaning 

that Lorenzo acted with an intent to deceive, manipulate, or 

defraud. (A finding of willfulness, as opposed to a finding of 

negligence, matters because it subjects a defendant to much 

higher penalties.) As a sanction, the judge not only fined 

Lorenzo, but also imposed a lifetime suspension that prevents 

Lorenzo from ever again working in the securities industry. 

The administrative law judge’s factual findings and legal 

conclusions do not square up. If Lorenzo did not draft the 

emails, did not think about the contents of the emails, and sent

the emails only at the behest of his boss, it is impossible to find 

that Lorenzo acted “willfully.” That is Mens Rea 101. 

Establishing that a defendant acted willfully in this context 

requires proof at least of the defendant’s “intent to deceive, 

manipulate, or defraud.” Dolphin & Bradbury, Inc. v. SEC, 

512 F.3d 634, 639 (D.C. Cir. 2008) (internal quotation marks

omitted). How could Lorenzo have intentionally deceived the 

clients when he did not draft the emails, did not think about the 

contents of the emails, and sent the emails only at his boss’s 

direction? 

The administrative law judge’s decision in this case 

contravenes basic due process. A finding that a defendant 

possessed the requisite mens rea is essential to preserving

individual liberty. See, e.g., Morissette v. United States, 342 

U.S. 246, 250-51, 263 (1952); see also United States v. 

Burwell, 690 F.3d 500, 527 (D.C. Cir. 2012) (en banc) 

(Kavanaugh, J., dissenting); United States v. Moore, 612 F.3d 

698, 703 (D.C. Cir. 2010) (Kavanaugh, J., concurring); Bluman 

v. FEC, 800 F. Supp. 2d 281, 292 (D.D.C. 2011) (three-judge 

panel). As Justice Jackson explained: “The contention that an 

injury can amount to a crime only when inflicted by intention 

is no provincial or transient notion. It is as universal and 
4

persistent in mature systems of law as belief in freedom of the 

human will and a consequent ability and duty of the normal 

individual to choose between good and evil. A relation 

between some mental element and punishment for a harmful 

act is almost as instinctive as the child’s familiar exculpatory 

‘But I didn’t mean to.’” Morissette, 342 U.S. at 250-51 

(footnote omitted). 

The administrative law judge’s opinion in this case did not 

heed those bedrock mens rea principles. Given the judge’s proLorenzo findings of fact, a legal conclusion that Lorenzo

“willfully” violated the securities laws makes a hash of the term 

“willfully,” and of the deeply rooted principle that punishment 

must correspond to blameworthiness based on the defendant’s 

mens rea.

Act Two: The Securities and Exchange Commission

Fast forward to the Securities and Exchange Commission, 

which heard the appeal of the administrative law judge’s 

decision. Surely the Commission would realize that the 

administrative law judge’s factual findings did not support the

judge’s legal conclusions and sanctions? 

And indeed, the Commission did come to that realization. 

But instead of vacating the order against Lorenzo, the 

Commission did something quite different and quite 

remarkable. In a Houdini-like move, the Commission rewrote 

the administrative law judge’s factual findings to make those 

factual findings correspond to the legal conclusion that 

Lorenzo was guilty and deserving of a lifetime suspension. 

Recall what the administrative law judge found: that 

Lorenzo’s boss “drafted” the emails, that Lorenzo did not think

about the contents of the emails, and that Lorenzo sent the 
5

emails only after being asked to do so by his boss. ALJ Op. at 

5, J.A. 906. The judge reached those conclusions only after 

hearing Lorenzo testify and assessing his credibility in person. 

Without hearing from Lorenzo or any other witnesses, the 

Commission simply swept the judge’s factual and credibility 

findings under the rug. The Commission concluded that 

Lorenzo himself was “responsible” for the emails’ contents. In 

the Matter of Francis V. Lorenzo, Securities Act Release No. 

9762, Exchange Act Release No. 74836 at 16 (Apr. 29, 2015), 

J.A. 930. How did the Commission magically explain its 

decision to discard the administrative law judge’s findings of 

fact? Easy. In a footnote, the Commission said that it did not 

need to “blindly” accept the administrative law judge’s factual 

findings and credibility judgments. Id. at 16 n.32, J.A. 930 

n.32. Voila.

The Commission’s handiwork in this case is its own

debacle. Faced with inconvenient factual findings that would 

make it hard to uphold the sanctions against Lorenzo, the 

Commission – without hearing any testimony – simply 

manufactured a new assessment of Lorenzo’s credibility and 

rewrote the judge’s factual findings. So much for a fair trial.

Act Three: This Court

Fast forward to this Court. To its credit, the majority 

opinion rightly concludes that Lorenzo did not “make” the 

statements in the emails for purposes of Rule 10b-5(b) liability. 

See Janus Capital Group, Inc. v. First Derivative Traders, 564 

U.S. 135 (2011). And the majority opinion, also to its credit, 

vacates the grossly excessive lifetime suspension of Lorenzo 

and sends the case back to the SEC for reconsideration of the 

appropriate penalties.
6

So far, so good. But applying what it calls “very 

deferential” review, the majority opinion upholds the finding 

of liability against Lorenzo under Section 10(b), Rule 10b-5(a) 

and (c), and Section 17(a). Maj. Op. 7, 18-25. The majority 

opinion does so on the ground that Lorenzo willfully engaged 

in a scheme to defraud even though he did not “make” the 

statements in the emails.

I disagree on two alternative and independent grounds 

with the majority opinion’s merits analysis. 

First, the majority opinion does not heed the 

administrative law judge’s factual conclusions, which were

based on the judge’s in-person assessment of Lorenzo’s 

testimony at trial. Those factual conclusions demonstrate that 

Lorenzo lacked the necessary mens rea of willfulness.

To show that Lorenzo willfully engaged in a scheme to 

defraud, the SEC had to prove that Lorenzo acted with an intent 

to deceive, manipulate, or defraud. But recall that, as findings

of fact, the administrative law judge concluded (after hearing 

Lorenzo testify) that Lorenzo did not draft the emails, did not 

think about the contents of the emails, and sent the emails only 

at the behest of his boss. 

In light of the administrative law judge’s factual findings, 

how can Lorenzo be deemed to have willfully engaged in a 

scheme to defraud? The majority opinion says that the facts 

found by the administrative law judge are not the right facts. 

Instead, in reaching its conclusion, the majority opinion relies

on the SEC’s alternative facts, which the SEC devised on its 

own without hearing from any witnesses. See Maj. Op. 20-21,
7

26-29 (adopting the SEC’s view of the facts over the 

administrative law judge’s view).1

It is true that, under certain circumstances, an agency such 

as the SEC may re-examine and overturn an administrative law 

judge’s factual findings. See Universal Camera Corp. v. 

NLRB, 340 U.S. 474, 492 (1951). But an agency does not have 

carte blanche to rewrite an administrative law judge’s factual 

determinations. Rather, an agency must act reasonably when 

it disregards an administrative law judge’s factual findings, a 

point the SEC’s attorney expressly acknowledged at oral 

argument. See Tr. of Oral Arg. at 28. It is black-letter law, 

therefore, that “a contrary initial decision” by an administrative 

law judge “may undermine the support for the agency’s 

ultimate determination.” Ronald M. Levin & Jeffrey S. 

Lubbers, Administrative Law and Process 101 (6th ed. 2017). 

 1 The majority opinion also says that Lorenzo, in his briefing 

here, does not describe his own state of mind in the way that the 

administrative law judge did. In other words, the majority opinion 

says that Lorenzo accepts the SEC’s reconstruction of the facts. I 

disagree. To be sure, Lorenzo advancesthe alternative argument that 

he should prevail even if the SEC’s reconstruction of the facts is 

correct. But Lorenzo certainly does not agree with or accept the 

SEC’s reconstruction.

Moreover, in making this point, the majority opinion draws a 

dichotomy between Lorenzo’s good-faith belief (as noted in his 

briefs) in the accuracy of the emails and Lorenzo’s statement that he 

did not think about the contents of the email. That is a false 

dichotomy. When forwarding an email on behalf of your boss, you 

could have a good-faith belief in its accuracy because you trust your 

boss, or at least have no reason to delve deeply into the particulars of 

the email’s contents, not because you have necessarily read or 

independently verified the contents of the email. The majority 

opinion notes that Lorenzo, “as of November 2009,” did not trust his 

boss. Maj. Op. 27. But that date is of course after the events at issue 

in this case.
8

And here is the key principle that speaks directly to this case: 

“When the case turns on eyewitness testimony . . . the initial 

decision should be given considerable weight: the ALJ was 

able to observe the demeanor of the witnesses and assess their 

credibility and veracity first hand.” Id.

In my view, the majority opinion misapplies those blackletter principles. Contrary to the majority opinion’s acceptance 

of the SEC’s reconstruction of the facts in this case, I would 

conclude that the SEC’s rewriting of the administrative law 

judge’s findings of fact was utterly unreasonable and should 

not be sustained or countenanced by this Court. Given that 

Lorenzo was the only relevant witness at trial (dwell again on 

that point for a few moments) and given that his credibility was 

central to the case, the SEC had no reasonable basis to run 

roughshod over the administrative law judge’s findings of fact 

and credibility assessments. In short, the SEC’s rewriting of 

the findings of fact deserves judicial repudiation, not judicial 

deference or respect.

Instead of deferring to the SEC’s creation of an alternative 

factual record, as the majority opinion does, we should 

examine the administrative law judge’s underlying findings of 

fact and ask whether those findings suffice to support the 

conclusion that Lorenzo willfully engaged in a scheme to 

defraud. The answer to that question, as explained above, is a 

clear no.2

 2 At oral argument, counsel for the SEC actually stated that it 

would have been “more difficult” for the SEC to find Lorenzo liable

if Lorenzo’s email had said that it was being sent “on behalf of” his 

boss instead of “at the request of” his boss. Counsel for the SEC 

asserted that those two phrases were “meaningfully different.” Tr. 

of Oral Arg. at 30. With respect, I find that argument absurd and an 

illustration of how the Commission jumped the rails in this case. It 

is startling that the SEC thinks such a wafer-thin semantic distinction 
9

Second, put that aside. Even if I am wrong about the first

point, the majority opinion still suffers from a separate flaw, in 

my view. 

The majority opinion creates a circuit split by holding that 

mere misstatements, standing alone, may constitute the basis 

for so-called scheme liability under the securities laws – that is,

willful participation in a scheme to defraud – even if the 

defendant did not make the misstatements.3

 No other court of 

appeals has adopted the approach that the majority opinion 

adopts here. Other courts have instead concluded that scheme 

liability must be based on conduct that goes beyond a 

defendant’s role in preparing mere misstatements or omissions

made by others. 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); see also SEC v. Kelly, 817 F. 

Supp. 2d 340, 343-44 (S.D.N.Y. 2011). Otherwise, the SEC 

would be able to evade the important statutory distinction

between primary liability and secondary (aiding and abetting) 

liability. After all, if those who aid and abet a misstatement are 

themselves primary violators for engaging in a scheme to 

defraud, what would be the point of the distinction between 

primary and secondary liability?

The distinction between primary and secondary liability

matters, particularly for private securities lawsuits. For 

decades, however, the SEC has tried to erase that distinction so 

 

can make the difference between (i) a lifetime suspension from your 

chosen profession and (ii) no penalty at all. 3 On page 31, the majority opinion ultimately appears to 

acknowledge the circuit split: “Insofar as those courts of appeals 

would find Lorenzo’s actions to lie beyond the reach of those 

provisions, we read the provisions differently.”
10

as to expand the scope of primary liability under the securities 

laws. For decades, the Supreme Court has pushed back hard 

against the SEC’s attempts to unilaterally rewrite the law. See 

Janus, 564 U.S. 135; Stoneridge Investment Partners, LLC v.

Scientific-Atlanta, Inc. 552 U.S. 148 (2008); Central Bank of 

Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 

164 (1994). Still undeterred in the wake of that body of 

Supreme Court precedent, the SEC has continued to push the 

envelope and has tried to circumvent those Supreme Court 

decisions. See, e.g., In the Matter of John P. Flannery & James 

D. Hopkins, Release No. 3981 (Dec. 15, 2014). This case is 

merely the latest example.4

 

I agree with the other courts that have rejected the SEC’s 

persistent efforts to end-run the Supreme Court. I therefore 

respectfully disagree with the majority opinion that Lorenzo’s 

role in forwarding the alleged misstatements made by 

Lorenzo’s boss can be the basis for scheme liability against 

Lorenzo.

 4 In this case, the SEC relied on its prior decision in Flannery. 

But as one respected commentator persuasively explained, the SEC’s

Flannery decision is wrong. “The substantive concern is that the 

Commission defined primary liability under portions of the major 

anti-fraud provisions in expansive ways that disregarded the 

reasoning and rationale of the Supreme Court and some courts of 

appeals. The Supreme Court has sought to clarify the distinction 

between primary and secondary liability under Rule 10b-5, yet the 

Commission’s Flannery decision all but eradicated the distinction 

and committed the same error with Section 17(a). It sought to regain 

the ground on primary liability that was lost in Stoneridge and Janus 

and then went further with novel constructions of primary liability 

based on lawful, non-deceptive actions or exorbitant doctrines of butfor causality.” Andrew N. Vollmer, SEC Revanchism and the 

Expansion of Primary Liability Under Section 17(a) and Rule 10b5, 10 VA. L. & BUS. REV. 273, 340 (2016).
11

Taking a step back on the scheme liability point, moreover, 

think about the oddity of the majority opinion’s combined legal 

rulings today. The majority opinion emphatically holds that 

Lorenzo did not “make” the statements in the emails. In 

reaching that conclusion, the majority opinion accurately says 

that “Lorenzo transmitted statements devised by” Lorenzo’s 

boss at his boss’s “direction.” Maj. Op. 16. The majority 

opinion also correctly notes that Lorenzo’s boss “asked 

Lorenzo to send the emails, supplied the central content, and 

approved the messages for distribution.” Maj. Op. 17. At the 

same time, however, the majority opinion emphatically holds 

that Lorenzo nonetheless willfully engaged in a scheme to 

defraud solely because of the statements made by his boss. 

That combined holding makes little sense (at least to me) under 

the facts of this particular case. Nor does it make much sense 

under the law, which is presumably why the other courts of

appeals have rejected that kind of legal jujitsu. In these

circumstances, perhaps the alleged offender (here, Lorenzo) 

could have been charged with aiding and abetting, if the 

relevant mens rea requirements for aiding and abetting liability 

were met. But Lorenzo may not be held liable as a primary 

violator, in my view.

* * *

Administrative adjudication of individual disputes is 

usually accompanied by deferential review from the Article III 

Judiciary. That agency-centric process is in some tension with 

Article III of the Constitution, the Due Process Clause of the 

Fifth Amendment, and the Seventh Amendment right to a jury 

trial in civil cases. See generally PHILIP HAMBURGER, IS 

ADMINISTRATIVE LAW UNLAWFUL? 227-57 (2014). That 

tension is exacerbated when, as here, the agency’s political 

appointees – without hearing from any witnesses – disregard

an administrative law judge’s factual findings. That said, the 
12

Supreme Court has allowed administrative adjudication ever 

since Crowell v. Benson, 285 U.S. 22 (1932). But the premise 

of Crowell v. Benson is that, putting aside any formal 

constitutional problems with the notion of administrative 

adjudication, the administrative adjudication process will at 

least operate with efficiency and with fairness to the parties 

involved. This case, among others, casts substantial doubt on

that premise. 

Securities brokers such as Frank Lorenzo obviously do not 

tug at the judicial heartstrings. And maybe Lorenzo really is 

guilty of negligence (or worse). But before the SEC reaches 

such a conclusion, Lorenzo is entitled to a fair process just like 

everyone else. Cf. United States v. Burwell, 690 F.3d 500, 527 

(D.C. Cir. 2012) (en banc) (Kavanaugh, J., dissenting). He has 

not received a fair process in this case. 

I hope that the SEC on remand pays attention, comes to its 

senses, and (at a minimum) dramatically scales back the 

sanctions in this case. Indeed, notwithstanding the majority 

opinion, I hope that the SEC, on its own motion, goes further 

than that: The SEC should vacate the order against Lorenzo in 

its entirety and either end this case altogether or (if appropriate

and permissible) fairly start the process anew before the

administrative law judge. 

I firmly disagree with the majority opinion’s decision to 

sustain the SEC’s findings of liability under Section 10(b), 

Rule 10b-5(a) and (c), and Section 17(a). I respectfully dissent.