Corporations – Securities Regulation – Material Misstatements of Omissions of Fact Under the Securities Act of 1933
Plaintiff sued for rescission of his purchase of stock in a corporation under section 12 (2) of the Securities Act of 1933 (hereafter referred to as the act) alleging a material misleading statement of fact in the prospectus. The alleged misstatement was that defendant was an “underwriter (as defined pursuant to the Securities Act of 1933 as amended).” No further explanation of defendant’s status and consequent obligation was made in the prospectus. Defendant had agreed in fact to be only a “best efforts” underwriter. The trial court found that the statement was misleading and material. On appeal, held, affirmed. Defendant’s statement conveyed the impression that he had made a “firm commitment” to dispose of the entire issue. Dale v. Rosenfeld, (2d Cir. 1956) 229 F. (2d) 855.