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Article
"Bright Line," "Substantial Participation," or Something Else: Who is a Primary Violator Under Rule 10b-5?
Faculty Publications and Presentations
  • Rodney D Chrisman, Liberty University
Publication Date
1-1-2001
Disciplines
Comments
89 KY. L.J. 201 (2001).
Abstract
This Note analyzes the competing theories currently used by courts and commentators to determine when a secondary actor’s conduct arises to the level of a primary violation under section 10(b) of the Securities and Exchange Act of 1934 and Securities and Exchange Commission rule 10b-5 on a theory of aiding and abetting primary violators. This Note proposes a workable and logical standard that can be used to differentiate a primary violation from mere aiding and abetting. Part I of the Note discusses the decision in Central Bank of Denver and the resulting dilemma that faced the lower courts in determining when a secondary actor is a primary violator. Part II provides an analytical discussion of the emergence of two tests often used to determine whether a secondary actor is a primary violator: the “bright line” and “substantial participation” tests. Finally, Part III discusses the elements of a primary violation of section 10(b) and rule 10b-5 as they relate to a secondary actor and proposes a workable and logical test to determine when a secondary actor’s conduct rises to the level of a primary violation.
Citation Information
Rodney D Chrisman. ""Bright Line," "Substantial Participation," or Something Else: Who is a Primary Violator Under Rule 10b-5?" (2001)
Available at: http://works.bepress.com/rodney_chrisman/4/