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1964

Fraud

Criminal Law

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Full-Text Articles in Law

New And Comprehensive Duties Of Securities Sellers To Investigate, Disclose, And Have An "Adequate Basis" For Representations, Willoughby C. Johnson Mar 1964

New And Comprehensive Duties Of Securities Sellers To Investigate, Disclose, And Have An "Adequate Basis" For Representations, Willoughby C. Johnson

Michigan Law Review

The duties of investigation and disclosure imposed upon securities salesmen have been significantly enlarged by several recent cases generated by the Second Circuit's 1963 decision of Berko v. SEC. In a hearing before the Securities and Exchange Commission it was found that Berko was a salesman working out of an acknowledged "boiler room." His employer had provided its salesmen, including Berko, with fraudulent sales brochures, some of which were subsequently distributed by Berko. The action by the Commission against Berko arose out of the sale of a specific security to a customer who had received fraudulent sales brochures and …