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misstatement (or omission) on which a purchaser or seller of securities relies may be liable as a primary violator under 10b-5, assuming all of the requirements for primary liability under Rule 10b-5 are met." 511 U.S. at 191. (emphasis in original). S.E.C.v. Zandford, 535 U.S. 813, 821 (2002) confirms that liability can apply even in the absence of a material misstatement ("[i]ndeed, each time respondent 'exercised his power of disposition [of his customers' securities] for his own benefit,’ that conduct, without more, was a fraud.").
Neither the statute nor the rule provide that the only circumstances in which liability attaches are for misstatements or material omissions. Neither Congress nor the Securities and Exchange Commission have so limited liability. Judicially rewriting the statute and rule to include such a requirement would exempt from liability those who participate in fraudulent schemes. Rewriting the statute and rule would encourage deceptive conduct. Affirming the decision of the Eighth Circuit would frustrate the purpose and goals of Congress and the Securities and Exchange Commission in enacting Section 10(b) and promulgating Rule 10b-5.
Failing to give effect to the terms of Section 10(b) would contravene the basic rule of statutory construction that the Court is to give effect to each word of a statute if possible. See Alaska Dep't of Envtl Conservation v. E.P.A., 540 U.S. 461 (2004); Duncan v. Walker, 533 U.S. 167 (2001). The Eighth Circuit’s analysis, which was based on policy considerations extrinsic to the statute, is flawed. "Policy considerations cannot override our interpretation of the text and structure of the Act, except to the extent that they may help to show that adherence to the text and structure would
