Securities and Exchange Commission v. GLT Dain Rauscher, Inc.
United States Court of Appeals for the Ninth Circuit
254 F.3d 852 (9th Cir. 2001)
Kenneth D. Ough, the vice president of the public-finance department of Dain Rauscher, Inc. (defendant), acted as the lead investment banker in the underwriting of nine municipal-note offerings from 1993 to 1994. The notes were a new type of security in which the issuers were all municipalities that used the proceeds for interest arbitrage, or investment purposes to make a profit. All of the issuers invested their profits in investment pools managed by Robert Citron, the treasurer of Orange County. As underwriter, Ough was responsible for preparing and drafting offering documents and reviewing final statements before issuing notes to investors. The final statements did not disclose that the notes were to be used for interest arbitrage or that the proceeds would go to Orange County investment pools. In making his risk evaluation, Ough relied upon statements by the Orange County treasury, the history of Orange County’s investment pools, and Citron’s experience. Citron used securities that were highly sensitive to interest-rate changes in order to generate high returns, so long as the rates declined or held steady. In 1994, interest rates were raised, causing significant losses that led to Orange County’s bankruptcy. The Securities and Exchange Commission (SEC) (plaintiff) sought a permanent injunction and civil penalties against Ough for violating § 17(a) of the Securities Act of 1933, § 10(b) of the Securities Act of 1934, and Rule G-17 of the Municipal Securities Rulemaking Board. The district court entered summary judgment for Ough, and the SEC appealed.
Rule of Law
Holding and Reasoning (Thompson, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 174,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,000 briefs, keyed to 188 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.