American Patriot Brands Inc., its subsidiaries in the cannabis industry, and three principals are liable to the SEC on some claims in a securities fraud enforcement suit, a federal court ruled Monday.

APB’s CEO and board chair Robert Lee and two other executives, Brian Pallas and J. Bernard Rice, acted at least recklessly in making material misstatements to investors about the health of the businesses, Judge Anne Hwang said for the US District Court for the Central District of California.

Hwang didn’t address the Security and Exchange Commission’s claim for unjust enrichment, which wasn’t at issue in its request for …