Tibet’s Board Observers Not Liable for IPO Omission (1)

Two men who worked on Tibet Pharmaceuticals Inc.'s initial public offering aren’t liable for its registration statement’s omission of a default judgment because they’re nonvoting board observers, the Third Circuit ruled July 23.

Nonvoting board observers aren’t liable for registration statement omissions and untruths because they aren’t similar enough to directors, the U.S. Court of Appeals for the Third Circuit said in response to an interlocutory appeal.

Tibet investors accused the company of leaving “material negative information” about a subsidiary’s finances out of its registration statement. They brought a class suit against Tibet, the investment bank that served as the ...