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Securities Fraud / Fiduciary Obligations / Omission Liability / Materiality Expert

By Candace Hom, Melinda Ghilardi, Nancy Rimmer, Sarah Gannett, Renee Pietropaolo and Tieffa Harper

In U.S. v. Schiff, --- F.3d ----, 2010 WL 1338141, April 07, 2010, defendants were "high-ranking corporate executives" at a pharmaceutical company, indicted for orchestrating a securities fraud scheme in violation of 15 U.S.C. § 78j(b) and SEC Rule 10b-5. The government filed an interlocutory appeal over a district court order addressing several contested theories of liability as well as expert witness issues under Daubert.In a lengthy opinion only briefly summarized here, the Court first addressed, and rejected, the viability of the government's legal theory that defendant had a fiduciary duty to rectify codefendant's allegedly material misstatements in subsequent SEC filings. Absent a duty to disclose, silence is not fraudulent or misleading under Rule 10b-5...continue to full post

Full post as published by Third Circuit Blog on April 23, 2010 (boomark / email).