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Full-Text Articles in Securities Law
Regulation Of Business - Sec Rule X-10b-5 - Recovery By Corporation Fradulently Induced To Issue Shares, William S. Bach
Regulation Of Business - Sec Rule X-10b-5 - Recovery By Corporation Fradulently Induced To Issue Shares, William S. Bach
Michigan Law Review
Defendants, Mountain States Securities Corporation and former officers of Consolidated American Industries, Inc., organized a dummy corporation, the Mid-Atlantic Development Company. The defendants drew a formal contract whereby Mid-Atlantic agreed to transfer worthless Cuban insurance company stock and equally valueless Honduran oil exploration rights to Consolidated in exchange for 700,000 shares of Consolidated stock. Consolidated's former secretary falsely certified a corporate resolution authorizing the issuance of the stock, and its former general counsel advised Consolidated's stock transfer agent that the transaction was exempt from SEC regulation. Acting on these representations, the transfer agent issued the Consolidated stock. Since at this …