The U.S. Court of Appeals for the Tenth Circuit held Tuesday that “when a non-employee consultant to a public corporation causes misstatements or omissions within periodic financial reports submitted to the Commission, knowing that those misstatements or omissions will reach investors, he can be held primarily liable under the antifraud provisions of the federal securities laws.”
The Court’s ruling came in SEC v. Wolfson, No. 06-4035, in which the SEC charged that Jon R. Marple, a non-employee consultant to a public company, committed securities fraud in relation to material misstatements and omissions contained within the public company’s periodic financial reports filed with the Commission. Marple drafted the relevant filings on the company’s behalf and otherwise played a significant role within the company.”
The district court found that Marple could be treated as primary violator of the securities laws based on the contents of the filings which Marple drafted and granted summary judgment to the SEC. Marple appealed, arguing that he could not be held liable under the securities antifraud statutes because the Commission failed to show that Marple, rather than the public company itself, made the material misstatements and omissions.
The 10th Circuit disagreed with Marple, and affirmed the lower court’s ruling.