Southern Home Medical Inc (SHOM)

[oleskool56]

SHOM can be sued for misstatements such as the PR which caused investors to buy their stock based on their statements while knowing those statements were false.

When federal securities laws are violated by market participants, the SEC can bring a civil enforcement action and can also bring criminal actions for some violations. The Exchange Act also allows investors to sue market participants who have defrauded them:

Section 10b (codified in 15 U.S.C. § 78j) and 17 C.F.R. § 240.10b-5 (Rule 10b-5): These are the principal statutory weapons against fraud. Section 10b is the antifraud provision of the Exchange Act, while Rule 10b-5 is the rule the SEC promulgated under that section. Rule 10b-5 prohibits the use of any "device, scheme, or artifice to defraud," and creates liability for any misstatement or omission of a material fact, or one that investors would think was important to their decision to buy or sell the stock. Courts held early on that investors can sue, and the scope of liability is broad: a wide range of participants, from brokers to issuers to company employees may be liable, provided that the fraud was "in connection with" a securities purchase or sale. The fraud is considered to be "in connection with" a securities transaction, if it was material to the decision to buy or sell a security.