Debt Obligations: The “Who Owes What?” Problem
A separate but critical allegation centers on Cardone’s claim that he—not investors—was responsible for the debt of the funds. The court called this misleading and “material,” explaining:
“There would be fewer costs for investors and thus greater returns if Cardone were responsible for the debt… A potential change in costs and returns thus could alter the ‘total mix’ of available information in the eyes of a reasonable investor.”
(See p. 15)
Why This Matters: Class Action Potential and Industry Impact
With the Ninth Circuit’s decision, the case goes back to the lower court, not just for Christine Pino, but for a class of similarly situated investors. This sets a powerful precedent for how courts might treat social media investment pitches—and signals real legal peril for Cardone and others using similar marketing tactics.
As the opinion makes clear, “Section 12(a)(2) is unique as ‘a virtually absolute liability provision that does not require an allegation that defendants possessed scienter.’”
(See p. 11)
This means intent to defraud isn’t even necessary—misleading claims or critical omissions are enough to land an influencer or investment promoter in court.
