Securities and Exchange Commission v. Tambone, et al.

NCLC supported rehearing en banc and then filed a supplemental brief urging the First Circuit to reject a previous decision by a three-judge panel that dramatically expanded liability for fraudulent statements under federal securities laws. In this case, employees of a mutual fund underwriter distributed a prospectus the SEC alleges they knew was misleading. The defendants, however, did not draft the prospectus.

The First Circuit, in an en banc ruling, held that underwriters do not make implied statements that could support primary Rule 10b-5(b) liability when they distribute prospectuses. The decision places a roadblock in front of class action plaintiffs that would seek to drag underwriters into 10b-5 litigation.

First Circuit invites NCLC to file amicus brief 2/23/09. Amicus brief supporting rehearing en banc filed 4/22/09. Rehearing en banc granted 7/22/09. Supplemental brief filed 9/1/09. Decided 3/10/10.