(CN) – The SEC correctly charged two investment underwriters with securities-law violations, the 1st Circuit ruled. The judge cited a previous ruling in an SEC case that said an underwriter is a “trail guide – not a mere hiking companion.”
The SEC charged James Tambone and Robert Hussey with violations in the sale of mutual funds for Columbia Funds Distributor. The district court dismissed the SEC’s complaint.
But Judge Lipez reversed, finding that Tambone and Hussey used false or misleading fund prospectuses to sell mutual fund shares.
“Tambone and Hussey made implied statement to investors … that they had a reasonable basis to believe that the financial statements were accurate and complete.”
Lipez cited the 2008 case, Dolphin & Bradbury Inc. v. SEC. That opinion described the correct role of an underwriter as a “trail guide – not a mere hiking companion.”