A principal of an investment adviser sold a branch office of a securities brokerage firm to a friend but allegedly failed to disclose to the investment adviser that the friend was paying the purchase price out of commissions generated by the adviser’s bond trades. This led the investment adviser to file materially inaccurate Forms ADV and to make inaccurate statements on its website. Both an SEC administrative law judge and, on appeal, the SEC concluded that the principal had violated the anti-fraud provisions of the federal securities laws and had aided and abetted violations by the investment adviser. The principal appealed the SEC decision to the U.S. Court of Appeals for the Tenth Circuit (Court), which upheld it in full. Notably, the Court ruled that the principal could be held liable for engaging in a fraudulent or deceptive scheme simply by failing to correct the adviser’s alleged misstatements. This article analyzes the facts leading up to the enforcement action and the Court’s decision – the first case by a U.S. Court of Appeals to apply the Supreme Court’s decision in Lorenzo v. SEC. See “What the Supreme Court’s Decision in Lorenzo v. SEC Means for Fund Managers” (Apr. 25, 2019).