Barnes & Thornburg Wins Back-to-Back Dismissals of SEC Scheme Liability Claims Brought Against Corporate Executives

On March 24, 2026, U.S. District Judge Patti Saris in the District of Massachusetts granted Dr. Foegh’s motion to dismiss all claims, finding that the SEC’s scheme liability claims were legally untenable and “relatively threadbare.”

Importantly, Judge Saris adopted and applied a landmark Second Circuit decision, Rio Tinto, finding that a person cannot be liable for engaging in a scheme to defraud investors merely by participating in the making of false statements. There must be “extra” misconduct that the SEC did not allege as to Dr. Foegh with the particularity and precision required under the federal rules.

This decision comes on the heels of another dismissal recently won by Barnes & Thornburg in a scheme liability case. In July 2025, a New York federal judge dismissed SEC’s scheme claims brought against Robert Horowitz, the former CFO of now-defunct online pharmacy Medly Health, also on the basis of Rio Tinto. This decision was among the matters leading to Law360 selecting Barnes & Thornburg as a 2025 White Collar Practice Group of the Year.

The BT team, led by partner Paul Kisslinger, also represents former Allarity executive James Cullem in this action. While the court’s decision did not dismiss all claims against Cullem, it nevertheless significantly narrowed the SEC’s case against him.

“We can now add D. Mass to the dozen or so district and appellate court decisions that have adopted and applied Rio Tinto to strike down amorphous scheme liability claims brought by the SEC and private plaintiffs,” Kisslinger said in a statement published by Law360 and Bloomberg Law. 

“Importantly, the Court’s decision not only finds that the SEC’s scheme claims against Dr. Foegh fail under the facts and law, a rare finding at this early state of litigation, but it also greatly trims down the SEC’s remaining claims against Mr. Cullem," Kisslinger added. “We are committed to vigorously defend Mr. Cullem as to these remaining claims to show that they, too, are without merit under the facts and law.”

The SEC can amend the complaint with respect to Dr. Foegh within 60 days of the dismissal order. 

The BT team also includes partners Alison Casey, Heather Repicky and Seth Mailhot, and associates Kaleb Gorman and Joseph Gergel.