The court of appeals affirmed a district court judgment in part, reversed in part, and remanded the action for further proceedings. The court held that a securities broker has a duty to disclose material information about a stock purchase if the broker and the broker’s client have a fiduciary relationship or a similar relationship of trust and confidence. The court held further that brokers’ substantial “bonus commissions” earned on sales of specific “house” stocks was material information subject to disclosure in the presence of a client trust relationship.
After the collapse of a securities fraud “pump and dump” scheme, the government indicted the owners, managers, and senior brokers of Hampton Porter Investment Bankers, LLC, a securities broker-dealer firm. The owners and managers pleaded guilty to charges of criminal securities fraud, but the senior brokers, including defendants Bryan Laurienti, Curtiss Parker, Donald Samaria, and David Montesano (Brokers), pleaded not guilty.
