Hanly v. Securities and Exchange Commission
United States Court of Appeals for the Second Circuit
415 F.2d 589 (1969)
Relevant factsFree
Hanly (defendant) and other brokers enthusiastically recommended stock in U.S. Sonics Corporation to potential investors, even though Sonics had never turned a profit and several potential mergers with larger companies had fallen through. The SEC (plaintiff) brought an enforcement action against Hanly, alleging he had a duty to disclose this adverse information and failed to, and barred him from associating with other brokers. Hanly appealed the sanction.
IssueFree
Whether brokers must disclose adverse information that they know or should know regarding a security offered to a client.