Gebhart was an experienced securities salesperson. For several years he sold a security that was recommended to him by a long-time friend in the industry. The friend told him the security was approved by the compliance office at Mutual of New York, where both had worked previously. Gebhart relied on that statement and did no investigation into the security, which in fact had not been reviewed by Mutual's compliance office. It was a scam that collapsed. The National Association of Securities Dealers barred Gebhart from the industry for life for failure to investigate. Gebhart appealed contending he did not commit securities fraud as he had no knowledge of the scam.
Does he have an argument? [Gebhart v. SEC, 595 F.3d 1034, 9th Cir. (2010)]