Free Proposed Jury Instructions - District Court of Colorado - Colorado

Case 1:04-cr-00103-REB-MEH

Document 1114-2

Filed 04/11/2007

Page 1 of 1

INSTRUCTION NO.

There are congressionally approved standards to assist the Court and the jury in evaluating good faith where reasonable due diligence is asserted by a person. There are levels of such civil diligence depending on the legal status of the person. From the highest level to the lowest level the following stratification is recognized for diligence as the act of a prudent person: (a) Issuers may not rely on a due diligence defense but may rely on advice of All others may rely on due diligence and good faith. The first

counsel as a defense.

consideration is the type of issuer. In this regard, the length, breadth, and duration of the issuing is important, and the track record is important. An issuer is one who has organized, structured, and controlled the offering of securities.

(b)

The type of security: Stock, partnership interests, investment contracts

with investors, royalties, fractional interests, or profit sharing contracts. (c) The type of person: Underwriter, promoter (organizer); accountant;

lawyer; salesrnan/marketer, salesman/investor; Also consider the formal education, investment experience, and sophistication of the person. (d) (e) The office held by the person in the organization, if any. The presence or absence of another relationship to the issuer, if the person

is now or will be a director.
(f)

Reasonable reliance by the person on officers, employees, and other

whose duties should have given them knowledge of the particular facts, (in light of that officer's position and relationship to the issuer).
(g)

The availability of information as to the issuer and the relevant facts.

(h)

The person's legal responsibility for the fact, if any.

The Securities Act of 1933, Section 11(b )(3) referring to "reasonable grounds to believe and did believe," and "after reasonable investigation he had reasonable grounds to believe and did believe.. ." S.A. Regulations, Rule 176: "Circumstances affecting the Determination of What Constitutes Reasonable Investigation and Reasonable Grounds for Belief."