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Securities Regulation-Sec Rule 10b-5-Recovery By Corporation Induced By Fraud Of Insider To Issue Shares, Charles K. Dayton
Securities Regulation-Sec Rule 10b-5-Recovery By Corporation Induced By Fraud Of Insider To Issue Shares, Charles K. Dayton
Michigan Law Review
Trustees in reorganization of a corporation brought suit on its behalf to recover damages under section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5 of the Securities and Exchange Commission, alleging that the corporation had been fraudulently induced by defendant, its comptroller, to issue stock for inadequate consideration. Also named as defendants were the American Stock Exchange and several banks and brokers, whose alleged complicity in the improper public distribution of the shares made them parties to the scheme to defraud the corporation. On a motion by all defendants but the comptroller to dismiss the complaint for …
Torts-Negligent Misrepresentation-Abolition Of The Privity Requirement, Leon E. Irish
Torts-Negligent Misrepresentation-Abolition Of The Privity Requirement, Leon E. Irish
Michigan Law Review
Defendants, professional consulting engineers, contracted with the city of Chattanooga to design a sewage system. As part of their performance of the contract they prepared a report of geological conditions which was to be distributed by the city to prospective bidders. Plaintiff, a tunneling subcontractor, had no dealings with the defendants, but did rely on their report in making its bid. Because one of defendant's draftsmen carelessly omitted pertinent geological information from the report, it took plaintiff three weeks longer to complete the work than had been anticipated. Plaintiff sued defendant for damages for misrepresentation; held, plaintiff may recover. …
Securities-Investment Advisers Act Of 1940-Antifraud Provisions Interpreted, Byron Bronston S.Ed.
Securities-Investment Advisers Act Of 1940-Antifraud Provisions Interpreted, Byron Bronston S.Ed.
Michigan Law Review
Defendant, Capital Gains Research Bureau, Inc., an investment advisory service, published a bulletin entitled "A Capital Gains Report," each issue of which advised approximately 5,000 subscribers as to the investment potential of a particular corporation's stock. On at least five occasions Capital Gains, and its president and sole stockholder, also a defendant, acquired some shares of a stock and, without revealing their interest therein, recommended its purchase in the bulletin. Following each recommendation, trading in the stock increased, the price rose, and, within a few days, defendants sold their shares at a profit. The Securities and Exchange Commission, alleging that …