Does the flexible duty standard apply in determining primary liability under Rule 10b-5?

To the extent that the district court applied the flexible duty standard it was in error. The flexible duty standard was developed in order to determine whether a defendant owed a duty to disclose material information for the purpose of assessing primary liability under Rule 10b-5. See White v. Abrams, 495 F.2d 724, 730-36 (9th Cir.1974). It had nothing to do with the duty to supervise. Arguably, the introduction of such a general standard would allow future plaintiffs to establish the existence of other types of duties (e.g., duty to investigate, duty to minimize possibility of fraud), the breach of which would show indirect participation in the fraudulent activity.