Hanly v. Securities and Exchange Commission case brief

Hanly v. Securities and Exchange Commission case brief summary
415 F.2d 589 (1969)

CASE SYNOPSIS

Petitioners, five securities salesmen, challenged an order of respondent Securities and Exchange Commission barring them from further association with any broker or dealer, having found that they violated federal securities laws in the offer and sale of stock.

CASE FACTS
Petitioners, employees of a registered broker-dealer, sold to customers over-the-counter stock of a company that was insolvent. Respondent Securities and Exchange Commission found petitioners' representations and recommendations materially false and misleading, and upon review of the examiner's findings, the Commission affirmed the ruling and increased the sanctions imposed. Petitioners appealed, asserting that the violations were not willful, but were based on good faith optimism, and that the sanctions imposed exceeded the Commission's authority.

DISCUSSION

• The court affirmed the decision because strict standards applied to such sale by petitioners, who had a special duty not to take advantage of customers in whom confidence had been instilled. 
• Required were adequate and reasonable basis for recommendations, disclosure of known and reasonably ascertainable facts, as well as disclosure of risks from lack of information. 
• Substantial evidence supported the Commission's finding that sanctions ordered by the examiner with respect to four petitioners were inadequate to protect the public interest, and the imposition of increased sanctions was within its authority.

CONCLUSION

The court affirmed the ruling, finding substantial evidence to support the imposition of increased sanctions with respect to four petitioners.

Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials