BOSTON – The U.S. Court of Appeals for the 1st Circuit recently issued an en banc opinion that rejected the Securities and Exchange Commission‘s reliance on prospectus language in bringing a Rule 10(b)(5) case against broker-dealer executives. The decision overturned an earlier panel ruling upholding the SEC’s use of the rule, which bars untrue statements in connection with the purchase or sale of a security.
The March 9 opinion in SEC v. Tambone, authored by Circuit Judge Bruce Selya on an issue of first impression, rejected “the SEC’s expansive interpretation” of the rule.
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