The U.S. Court of Appeals for the Third Circuit has ruled that nonvoting observers on Tibet Pharmaceuticals’ board of directors cannot be held liable by shareholders for omissions in the company’s registration statement.
The appeals court reversed a decision by a federal judge in New Jersey finding Hayden Zou and L. McCarthy Downs III liable under Section 11 of the Securities Act for omitting negative financial information about Tibet Pharmaceuticals from its registration statement.
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