$32\mathrm{.}4$ Section $10($b$)$ Leslie Neadeau was the president of T$.$O$.$N$.$M$.$ Oil & Gas Exploration

Corporation $($TONM$).$ Charles Lazzaro was a registered securities broker employed by

Bateman Eichler, Hill Richards, Inc. $($Bateman Eichler$).$ The stock of TONM was traded in the

over$-$the$-$counter market. Lazzaro made statements to potential investors that he had "inside

information" about TONM, including that $(1)$ vast amounts of gold had been discovered in

Surinam and that TONM had options on thousands of acres in the gold$-$producing regions of

Surinam; $(2)$ the discovery was "not publicly known, but would be subsequently announced";

and $(3)$ when this information was made public, TONM stock, which was then selling for $$1\mathrm{.}50$

to $$3\mathrm{.}00$ per share, would increase to $$10\mathrm{.}00$ to $$15\mathrm{.}00$ within a short period of time and

might increase to $$100\mathrm{.}00$ per share within a year.

Potential investors contacted Neadeau at TONM, and he confirmed that the information was

not public knowledge. In reliance on Lazzaro's and Neadeau's statements, the investors

purchased TONM stock. The "inside information" turned out to be false, and the shares

declined substantially below the purchase price. The investors sued Lazzaro, Bateman Eichler,

Neadeau, and TONM, alleging violations of Section $10(b)$ of the Securities Exchange Act of

The defendants asserted that the plaintiffs' complaint should be dismissed because they

participated in the fraud. Who wins? Bateman Eichler, Hill Richards, Inc. v$.$ Berner, $472$ U$.$S$.$

$299,105$ S$.$Ct$.2622,86$ L$.$Ed$\mathrm{.}2$d $215,$ Web $1985$ U$.$S$.$ Lexis $95($Supreme Court of the

United States$)$