Eighth Circuit Applies Negligence Standard To SEC Enforcement Claims For Violations Of Section 14(A) And Rules 14a-9, 13b2-1 And 13b2-2

In SEC v. Das, No. 12-2780, 2013 U.S. App. LEXIS 15327 (8th Cir. July 29, 2013), the United States Court of Appeals for the Eighth Circuit affirmed the district court's delivery of jury instructions applying a negligence standard to alleged violations of Section 14(a) of the Securities Exchange Act of 1934 ("1934 Act") and Securities & Exchange Commission ("SEC") Rules 14a-9, 13b2-1 and 13b2-2. This decision indicates that it is becoming easier for corporate officers to be held liable for violations of Section 14(a), Rule 14a-9, Rule 13b2-1 and Rule 13b2-2.

The SEC brought a civil enforcement action against Stormy Dean ("Dean"), a former chief financial officer of infoUSA, alleging that he had violated certain provisions of the 1934 Act. The SEC investigated Dean in connection with allegations of related-party transactions and misuse of corporate assets. The SEC asserted seven claims including solicitation of false proxy statements in violation of Section 14(a) and Rule 14a-9, falsification of records or accounts in violation of Rule 13b2-1 and deception of auditors in violation of Rule 13b2-2.

Dean's...