By overturning a lower court's dismissal of a case against former Columbia Funds executives James Tambone and Robert Hussey, the U.S. Court of Appeals for the First Circuit is permitting the Securities and Exchange Commission to proceed with its market-timing lawsuit against the two men.

The SEC lawsuit alleges that the two permitted at least eight preferred customers to market time Columbia Funds between 1998 and 2003.

The First Circuit ruled that Tambone and Hussey had a legal duty to comply with the accurate prospectuses of the funds in question, and that they were aware that false prospectuses had been distributed, inaccurately stating that market timing was permitted. A Massachusetts district court had dismissed the case in 2006, ruling that the two men were not responsible for the false prospectuses.

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