A Wider Scope of Primary Liability?

This post is from John F. Olson of Gibson, Dunn & Crutcher LLP.

In a recent novel decision in one of the mutual fund market timing cases brought by the SEC (SEC v. Tambone, ___ F.3d ___ (1st Cir. 2008), available at 2008 U.S. App. LEXIS 24457), the First Circuit held that the SEC had adequately alleged a primary violation of Section 10(b) and Rule 10b-5(b) for material misstatements “impliedly” made by the defendants. A sharply worded dissent criticized the Court’s holding for enlarging the scope of primary liability and blurring the line between primary and secondary liability that the Supreme Court recently drew in Stoneridge. Even though its impact remains to be seen, the First Circuit opinion has potentially significant implications for the scope of liability of defendants in both SEC enforcement actions and private civil securities litigation.

In an article entitled “A Wider Scope of Primary Liability?,Mark Schonfeld and Akita St. Clair address the implications of the SEC v. Tambone decision. This article recently appeared in Law360.

The article is available here.

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