## Facts

- Stadia Oil & Uranium Company sold shares of its stock to multiple purchasers without registering the securities under the Securities Act of 1933.
- The purchasers sued Stadia for unlawful sales of unregistered securities and sued Ben I. Rankin for secondary liability as a “controlling person” under § 15 of the Securities Act.
- Rankin helped organize Stadia and served as a vice president and as one of three directors.
- Evidence showed Rankin presided over and participated in board meetings in which the challenged share issuances and sales were discussed and authorized.
- Rankin signed at least some of the stock certificates issued in the challenged transactions.
- Rankin denied that he controlled the sales or knew the details of the transactions and characterized his involvement as limited.
- A jury found Stadia liable for selling unregistered securities and found Rankin liable as a controlling person; judgment was entered on the verdict.
- Stadia and Rankin appealed, challenging (among other points) the sufficiency of the evidence supporting Rankin’s controlling-person liability.

## Issues

1. Whether the evidence permitted the jury to find that Rankin “controlled” Stadia within the meaning of § 15 of the Securities Act of 1933.
2. Whether controlling-person liability under § 15 requires that the defendant personally execute the unlawful sales.
3. Whether Rankin established the statutory good-faith defense (lack of knowledge or reasonable grounds to believe in the violation) sufficient to avoid § 15 liability.

## Decision

- The Tenth Circuit affirmed the judgment against Stadia and Rankin.
- The court held the evidence was sufficient for the jury to find Stadia sold unregistered securities in violation of the Securities Act.
- The court held the evidence was sufficient for the jury to find Rankin was a controlling person, based on his officer/director status, organizing role, participation in authorizing corporate action, and execution of stock certificates.
- The court rejected the argument that § 15 liability required Rankin’s direct participation in each sale.
- The court upheld the jury’s rejection of Rankin’s asserted lack-of-knowledge defense and deferred to the jury’s resolution of factual disputes where supported by substantial evidence.

## Legal Principles

- “Control” under § 15 is determined functionally by power to direct or influence the issuer’s policies and actions connected to the securities violation, not solely by whether the defendant personally made the sales.
- A corporate officer/director who participates in corporate decisions authorizing the issuance and sale of securities, and who takes affirmative acts such as signing stock certificates, may be found to control the issuer for § 15 purposes.
- Once a primary Securities Act violation and control status are shown, the controlling person bears the burden of proving the statutory good-faith defense (no knowledge or reasonable grounds to believe in the facts constituting the violation).
- Appellate review of a jury verdict is limited; credibility determinations and reasonable inferences from evidence are for the jury where the record contains substantial supporting evidence.

## Conclusion

The court affirmed liability for unlawful unregistered stock sales and upheld secondary liability under § 15, concluding that Rankin’s corporate authority and participation supported a finding of control and that he did not carry the statutory burden to establish a good-faith lack-of-knowledge defense.


Stadia Oil & Uranium Co. v. Wheelis, 251 F.2d 269 (10th Cir. 1957)