Bateman Eichler, Hill Richards, Inc. v. Berner

Berner (plaintiff) bought large quantities of stock in TONM through Lazzaro, a broker for Bateman Eichler, Hill Richards (defendant), after Lazzaro claimed to have inside information from TONM executives about a lucrative gold-mining joint venture and predicted the stock would skyrocket from $1.50 to $100 per share. Berner alleged this was actually a conspiracy between Lazzaro and TONM's president to fraudulently pump up the stock price, and that Bateman knew the tip was false, violating Rule 10b-5. The district court dismissed Berner's suit, but the court of appeals reversed in Berner's favor, and the Supreme Court granted certiorari.