21 Weiss v. SEC, 468 F.3d 849, 855-56 (D.C. Cir. 2006), and against fraudulent schemes. See, e.g., In re Schmidt, Rel. No. 8061, 2002 WL 89028, at *7-8 (S.E.C. Jan. 24, 2002). Most important for this case, § 17(a) does not create a private right of action. See, e.g., Finkel v. Stratton Corp., 962 F.2d 169, 175 (2d Cir. 1992) (citing cases). If Congress wanted private civil claims for “scheme” liability, it would have provided an express cause of action for § 17(a) claims, just as it did for the express but narrower §§ 11 and 12 claims. It did not. Instead, § 17(a)’s sweeping prohibitions are bounded by the SEC’s and the Justice Department’s sound prosecutorial discretion, which ensures a focus on genuinely serious wrongdoing and the public interest. This is in marked contrast to the pursuit of private remedies, where the private plaintiffs’ bar has a powerful economic incentive to sue everyone. The detrimental effect of those incentives on the competitiveness of American business is obvious: in the last decade, even after the PSLRA, 2,465 issuers have been named as defendants in securities fraud class actions out of approximately 6000 companies listed on the major U.S. exchanges. See Final Report, at 30. “Scheme” liability would cause those already astounding numbers to multiply, given that all companies do business with other companies.12
12
Like § 17(a), other provisions of the 1933 and 1934 Acts also expressly authorize the government, but not private civil plaintiffs, to pursue a variety of secondary actors. The 1934 Act grants the SEC express statutory authority to pursue registered broker-dealers and their “associated persons” who “willfully aided, abetted, counseled, commanded, induced, or procured” violations of the securities laws. 15 U.S.C. §§ 78o(b)(4)(E), 78u-2(a)(2). See also Central Bank, 511 U.S. at 183. The SEC also can sue ongoing and future violators of the securities laws “and any other person that is, was, or would be a cause of the violation, due to an act or omission the person knew or should have known would contribute to such violation.” 15 U.S.C. § 78u-3(a) (emphasis added). The SEC and Justice Department also can pursue those who “made or caused to be made” false statements in required filings or
