Dolphin & Bradbury, Inc. v. Securities and Exchange Commission

Dolphin & Bradbury, Inc. (Dolphin) (defendant), a broker-dealer, acted as the underwriter for the Dauphin County General Authority (DCGA) in the purchase of Forum Place, an office building. In July 1998, the Pennsylvania Department of Transportation (PennDOT) occupied Forum Place for what was to be a temporary period, with the lease expiring in November 2001. Key participants for DCGA were informed on June 30, 1998, without guarantees, that the state government planned on using Forum Place after PennDOT’s departure. Robert J. Bradbury (defendant), the chief executive officer of Dolphin, was informed of the government’s intended use. Bradbury relied on information regarding that use to assure potential investors. However, Bradbury failed to disclose information regarding PennDOT’s departure in the key disclosure document and claimed that the lease rates would continue until at least 2008. The information was also only available in the public domain through a newspaper article and a discussion that occurred in a public DCGA meeting. By 2000, 55 percent of Forum Place lay vacant, and bondholders forced Forum Place into receivership in 2003. Bradbury was found by the Securities and Exchange Commission (SEC) (plaintiff) to have violated various securities laws and regulations by acting with scienter in the failure to disclose. Bradbury appealed the SEC’s order.