Affiliated Ute Citizens v. United States

Congress created a corporation (UDC) to distribute stock to mixed-blood Ute tribal members (plaintiffs) as part of ending federal oversight of tribal assets, with a bank serving as transfer agent for the shares. Two bank employees (defendants) bought over a thousand shares from tribal members at low prices without disclosing that non-tribal buyers were paying much more for the same stock, or that the employees themselves were collecting commissions from those buyers — conduct that went well beyond simply serving as passive transfer agents. The plaintiffs sued under SEC Rule 10b-5; the district court ruled for them, but the Tenth Circuit reversed in part for failure to prove reliance.