Howard v. Everex Systems, Inc.

SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16186 / June 11, 1999

AMICUS CURIAE BRIEF ADDRESSING LIABILITY OF CORPORATE OFFICIALS WHO SIGN REPORTS FILED WITH THE COMMISSION THAT CONTAIN MISREPRESENTATIONS

HOWARD V. EVEREX SYSTEMS, INC., NO. 98-17324 (9TH CIR.)

On June 9, 1999, the Securities and Exchange Commission filed an amicus curiae (or friend of the court) brief in the United States Court of Appeals for the Ninth Circuit in Howard v. Everex Systems, Inc. The brief addresses the liability, in private lawsuits brought under the antifraud provisions of Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5, of corporate officials who sign documents filed with the Commission that contain material misrepresentations. The brief takes the position that when an official signs a document that he knows (or is reckless in not knowing) contains misrepresentations, the official can be liable in a private antifraud action even if he was not involved in preparing the document. The brief stresses the importance of full and honest reporting to the proper functioning of the securities markets and the important role corporate officials play in assuring that reports filed with the Commission are complete and accurate.