Kirby McInerney Appears Before United States Supreme Court Concerning Janus Securities Class Action12/07/2010
WASHINGTON, D.C., December 7, 2010 – The firm appeared before the United States Supreme Court this morning, urging the Court to uphold the United States Court of Appeals for the Fourth Circuit’s decision reinstating Wiggins v. Janus Capital Group following dismissal in district court.
Filed on behalf of investors in common stock of Janus Capital Group Inc., the case arises as a result of an alleged fraud concerning “market timing” trades that Janus secretly had allowed some hedge funds to execute. This permitted the chosen hedge funds to profit at the expense of other investors in the Fund, and increased the assets on which Janus could collect management fees. Janus initially had told investors that it had taken steps to prevent market timing trades, but contrary facts emerged, and its stock price plunged. The company has settled with the S.E.C., paying substantial fines.
The issue facing the Supreme Court is not whether Janus Capital Management committed fraud, but whether it can be held legally accountable for certain statements involving the Janus mutual funds, which were created and controlled by Janus Capital Management. Defendants contend that earlier Supreme Court decisions partition Janus Capital from liability.
During the argument this morning, Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan noted that the Fund’s prospectuses were composed in-house by Janus Capital Management attorneys, while Chief Justice John Roberts and Justice Antonin Scalia focused more on the technical legal separation of the Janus Funds from Janus Capital Management. A decision is expected by July 2011.