Tuesday, November 27, 2007
Ind. Decisions - "The Indiana Securities Law requires more of a director than a simple assumption that all is well."
In Ralph E. Lean v. Charles D. Reed and Paul A. Reinken, and Galaxy Online, Inc. and Galaxy Internet, Inc., a 14-page, 4-1 opinion, Justice Boehm writes:
The Indiana Securities Law creates liability of a director of a corporation for violations of the requirement that the corporation’s securities be registered and for misrepresentations and omissions of material facts in the sale of its securities. The director may establish a defense that in the exercise of reasonable care he did not know and could not have known of the violations. In most cases reasonable care is a fact issue. However, where it is undisputed that the director had no basis other than an assumption that management and counsel had arranged the transaction in conformity to law, failure to exercise reasonable care is established as a matter of law. * * *
The Indiana Securities Law requires more of a director than a simple assumption that all is well.
Conclusion. The trial court’s grant of partial summary judgment is affirmed. We summarily affirm the Court of Appeals as to issues not addressed in this opinion. See Appellate Rule 58(A).
Shepard, C.J., and Dickson and Rucker, J.J., concur.
Sullivan, J., dissents, believing this appeal should be dismissed as moot because this case has been settled.
Posted by Marcia Oddi on November 27, 2007 01:27 PM
Posted to Ind. Sup.Ct. Decisions