Is a mutual fund company responsible for the statements made in a prospectus for one of its funds?

Is the manager of the fund?

Possibly not, in either case.

The U.S. Supreme Court has ruled that mutual fund shareholders have a limited right to sue mutual fund companies or fund managers for fraud.

In a case involving, Janus Capital Group and First Derivative Traders, the court ruled 5-4 that mutual fund shareholders coujld not sue Janus for misleading information found in a prospectus.

The ruling also appeared to indicate that shareholders could not necessarily sue a subsidiary involved.

That’s could occur if neither Janus nor its subsidiary actually produced the prospectus in question.

The case arose from accusations that Janus gave some clients hints regarding when it expected markets to change direction. That could encourage those clients to make moves at the expense of other clients.

Here’s how Chuck Jaffe at MarketWatch condensed the conundrum:

In 2003, regulators uncovered the rapid-trading deals at Janus and a number of other fund firms. Ultimately, in 2004, Janus paid $225 million to settle claims that it had failed to disclose the trading arrangements to long-term investors.

But that settlement was for investors in the fund, not in shares of Janus stock. The question in the case was whether the parent company — whose stock price cratered when news of the scandals broke — could be held responsible for making misleading statements in the documents.

Ultimately, the high court’s decision boiled down to defining the word “make.” Since the prospectus is produced by the fund, it was the fund — and not the parent company — that “made” the misleading statements.

That’s a distinction without a difference, at least in the minds of ordinary investors.

“To suggest that the sponsor is not responsible for what happens at the fund is illogical,” according to Geoff Bobroff, an industry consultant from East Greenwich, R.I. “If you buy a fund from Janus or Fidelity or Putnam or T. Rowe Price, you’re thinking the parent is responsible. If they’re not responsible — if they can’t be held liable — there’s no telling what they might think they can get away with someday.”

Here’s a legal rundown on the case.