“Seems wrong to me, but what do I know If it’s right, though, it means that pump and dumps are completely legal, as are fake takeover offers[7]: It’s not fraud to lie about stocks and make money trading them, as long as you are only trading on the stock market and not directly with the people you’re lying to. (Not legal advice! This is one weird opinion in Texas, don’t try it at home.) If that’s right, the stock market, and social media, are going to get pretty weird.[8]” - Matt Levine, article
I wonder if he actually read the court opinion. Its not too long, just 12 pages. I’d recommend reading it. As far as what the judge cited it seems pretty legitimate based on the court cases he was citing (I just googled them and read a summary of the rulings on Oyez). A lot of how U.S. law is defined is by court cases. So as far as I can tell the judge isn’t that wild in his ruling as he was basing his ruling off of the precedent set by other cases. The cases he cited mentioned an intent is needed. Now I don’t think this is correct in how fraud should be handled, but this is a larger issue of how the law is dealt with rather than one judge. The cases that the defense (the defrauders) used to cite their reasoning were quite recent. One of them, Ciminelli v. United States, was decided in May of last year which is very recent as far as Supreme Court stuff goes. The other one, Greenlaw, had no good summaries available as it was a decision by the fifth circuit court but from the Justia summary plus skimming it seems reasonable as to why the judge deemed it necessary for an intent requirement.
His ruling was based on other rulings. While I think I agree with you and Matt Levine on what fraud is, his ruling was from a chain of other bad rulings. The way the U.S. legal system works, as far as I know, if theres not a statute its determined by cases.
Heres the thing that never made sense to me but I’ve heard some lawyers talk about it (Robert Barnes, he has a good legal podcast in my opinion and has a lot of experience with big companies and the stuff they do, and Harvey Silverglate in his book Three Felones A Day): fraud, and more broadly many crimes in general, are only illegal in the contexts in which they are written to be legal. For you to convict someone under securities fraud. You can’t simply do fraud related to securities. You have to commit fraud as those statutes and related case determine what fraud do. I can find relevant quotes from Three Felones a Day from Harvey if anyone is interested, he’s mentioned that a worry prosecutors have is that a criminal can commit what seems to be a crime but it is not written in the books to be a crime yet.
This never made sense to me. Fraud is fraud. Now I think there is a lot of benefit to define what fraud looks like in various contexts in order to make it easier for courts to prosecute, but I never understood why apparently fraud was allowed to be committed, to an extent, over mail and wires until mail and wire fraud laws were made.
So yeah, as far as I understand for a lot of legal matters it has to be made illegal in very specific contexts or otherwise it can’t be charged unless someone in courts wants to make the time to make some case law on the matter.