Congress created the Ute Distribution Corporation (UDC) to assist in the process of removing government oversight of various Ute tribe assets. To help with this process, UDC issued 10 shares of stock to each mixed-blood member of the Ute tribe (plaintiffs). First Security Bank of Utah (Bank) was hired as the transfer agent for the shares and would otherwise hold the shares for the plaintiffs. Gale and Haslam (defendants), employees of the Bank, purchased 1,387 shares of stock from the plaintiffs, but did not disclose that shares were being traded by non-tribe members for much higher prices than the defendants paid. The defendants also did not disclose that these non-tribe members were giving the defendants commissions and gratuities for their part in the process. The defendants, in essence, were not acting as mere transfer agents, but were actively establishing a market for UDC stock. The plaintiffs brought suit under Securities and Exchange Commission (SEC) Rule 10b-5. The district court found in favor of the plaintiffs. The United States Court of Appeals for the Tenth Circuit reversed in part, finding that the plaintiffs did not prove their reliance on the defendants’ misrepresentations. The United States Supreme Court granted certiorari.