Berko v. Securities and Exchange Commission

316 F.2d 137 (1963)

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Berko v. Securities and Exchange Commission

United States Court of Appeals for the Second Circuit
316 F.2d 137 (1963)

  • Written by Tanya Munson, JD

Facts

MacRobbins & Co., Inc. (MacRobbins) operated a boiler-room high-pressure sales effort for the principal and specialized purpose of selling Sports Arenas, Inc. stock. MacRobbins had widely distributed two brochures through the mail that were deceptive and misleading. MacRobbins had employed 10 salesmen to make and receive phone calls to sell the Sports Arenas stock. The salesmen, particularly Irwin Berko (defendant), relied on the information contained in the brochures to sell the stock. Berko had represented to potential customers that there was a good possibility that the stock would more than double in price within a year. At the time, Sports Arena was operating at a loss. The Securities and Exchange Commission (SEC) (plaintiff) had found that MacRobbins had violated the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC revoked the broker and dealer registration of MacRobbins. Further, the SEC found that Berko was a cause of the registration revocation within the meaning of § 15A(b)(4) of the Securities Exchange Act. Berko petitioned for review of the SEC’s order. On the petition, the court of appeals found that the SEC’s findings were incomplete and unclear and remanded the case to the SEC. The SEC filed a new opinion reaffirming its previous finding that Berko was the cause of the revocation of MacRobbin’s registration. Berko again petitioned for review.

Rule of Law

Issue

Holding and Reasoning (Marshall, J.)

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