Probst v. Oklahoma

Can a partnership be a regulatable security if the partner had managerial authority on paper, but was unaware or never exercised the authority?

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Defendant Probst was in the business of estate planning. He advised clients to invest in a construction project undertaken by a firm he was intimately involved in, although that relationship was not divulged to the estate-planning client. Probst was convicted with Offer and Sale of Unregistered Securities. Probst appealed, claiming that the investment was not a security because the investors were partners, and had management authority and control over the venture according to the partnership documents. However, there was evidence that the investors were unaware they had any authority, had not ever seen those documents, and had no experience in managing such affairs.

Case and case summary are also available online at: http://www.mlmlegal.com/legal-cases/Probst_v_Oklahoma.php

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Published In: Criminal Law Updates, MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates, Securities Updates

Reference Info: | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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