In Prousalis, the defendant was convicted of securities fraud and then filed a habeas petition after the Supreme Court’s decision in Janus was issued, claiming that the conduct was no longer criminal. The Fourth Circuit rejected that argument, emphasizing that “Janus concerned the ability of a private plaintiff invoking [Section 10(b)’s] . . . implied right to sue a mutual investment adviser” and that “[a]ny textual conclusion announced in this particular area of law would not be casually generalizable to the criminal context.”
Prousalis is significant because it unambiguously limits Janus to private rights of action. Thus, in criminal cases brought by the DOJ (and arguably in civil cases brought by the SEC), defendants may not be able to rely on Janus to avoid primary liability. While the concern for private litigation clearly underlies Janus, it remains to be seen whether other circuits will follow the Fourth Circuit’s lead and likewise limit Janus to the context of Rule 10b-5’s implied private right of action.
For a more in-depth discussion of Janus and its effect on public enforcement by the SEC of securities fraud, see John Patrick Clayton, The Two Faces of Janus: The Jurisprudential Past and New Beginning of Rule 10b-5, 47 U. Mich. J.L. Reform 853 (2014).