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Page Number: 17

12 

SEC v. JARKESY 

Opinion of the Court 

suit  in  rulemakings.  Rule  10b–5,  for  example,  prohibits
“any device, scheme, or artifice to defraud,” and “engag[ing] 
in any act . . . which operates or would operate as a fraud.” 
17 CFR §§240.10b–5(a), (c).

Congress’s decision to draw upon common law fraud cre-
ated an enduring link between federal securities fraud and 
its  common  law  “ancestor.”  Foster  v.  Wilson,  504  F.  3d 
1046,  1050  (CA9  2007).  “[W]hen  Congress  transplants  a
common-law term, the old soil comes with it.”  United States 
v.  Hansen,  599  U. S.  762,  778  (2023)  (internal  quotation
marks  omitted).    Our  precedents  therefore  often  consider 
common law fraud principles when interpreting federal se-
curities  law.  E.g.,  Dura  Pharmaceuticals,  Inc.  v.  Broudo, 
544 U. S. 336, 343–344 (2005) (evaluating pleading require-
ments  in  light  of  the  “common-law  roots  of  the  securities
fraud action”); Schreiber v. Burlington Northern, Inc., 472 
U. S.  1,  7  (1985)  (“The  meaning  the  Court  has  given  the
term  ‘manipulative’  [in  §10b  of  the  Securities  Exchange 
Act] is consistent with the use of the term at common law 
. . . .”  (footnote  omitted));  Chiarella  v.  United  States,  445 
U. S. 222, 227–229 (1980) (explaining that insider trading
liability under Rule 10b–5 is rooted in the common law duty 
of  disclosure);  Basic  Inc.  v.  Levinson,  485  U. S.  224,  253 
(1988) (White, J., concurring in part and dissenting in part) 
(“In general, the case law developed in this Court with re-
spect to §10(b) and Rule 10b–5 has been based on doctrines
with  which  we,  as  judges,  are  familiar:  common-law  doc-
trines of fraud and deceit.”).

That is not to say that federal securities fraud and com-
mon law fraud are identical.  In some respects, federal se-
curities fraud is narrower.  For example, federal securities 
law  does  not  “convert  every  common-law  fraud  that  hap-
pens  to  involve  securities  into  a  violation.”  SEC  v. 
Zandford, 535 U. S. 813, 820 (2002).  It only targets certain
subject matter and certain disclosures.  In other respects,