Michigan
How Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A. applies in Michigan: state-specific rules, key cases, and bar exam notes for Securities Law.
In Michigan, the principles established in Central Bank of Denver, N.A. regarding primary and secondary liability under securities law are emphasized. Michigan courts follow the precedent that only those who make a false statement or substantial omissions can be held liable, insisting on a clear distinction between those who issue securities and those who merely facilitate transactions.
In Michigan, under the Michigan Uniform Securities Act, a party can be held liable for securities fraud only when they have made a misstatement or omission materially affecting the investment decision, consistent with the standards outlined in Central Bank.
The Michigan Court of Appeals held that brokers cannot be held liable for unsanctioned statements made by third parties unless they actively encourage or endorse such statements.
This case reaffirmed that for liability to arise, a defendant must have direct involvement in the creation or distribution of fraudulent materials.
The court ruled that mere silence does not equate to fraud unless there is a duty to disclose pertinent information.
Michigan's approach aligns closely with the federal standard as established by the SEC and federal case law, particularly in defining liability based on substantive involvement in the fraudulent activity. However, Michigan's specific statutes under the Uniform Securities Act can elaborate on liability criteria that may differ slightly from federal guidelines.
Understanding the implications of Central Bank of Denver on Michigan's securities law is crucial for the Michigan bar exam, especially in questions pertaining to liability and the definitions of primary versus secondary liability.