The case Charles Schwab & Co. Inc. v. Douglas Castro asserts that Douglas Castro, a former employee of Charles Schwab & Co. Inc., left his position as a financial consultant with the company to form his own private brokerage firm wherein the defendant used confidential client information obtained from his tenure of employment with the plaintiff to allure investors away from his previous employer. By doing so, the plaintiff alleges that the defendant directly benefited from misappropriation of the confidential information that was obtained during employment at Charles Schwab & Co. Inc. The facts of the case are as follows: Douglas Castro had access to clients with a combined net worth of approximately $275 million while employed at Charles Schwab. …show more content…
Charles Schwab & Co. Inc. issued as evidence signed documents by Castro relating to confidentiality and non-solicitation, which prohibited Castro from doing the very things he did with respect to poaching investors away from Schwab. The questions of law include breach of contract, misappropriation and misuse of trade secrets, breach of duty of loyalty, and unfair competition. It is being argued by Schwab that Castro could not have known of the prospective clients and their financial positions without his employment at Schwab and that Castro acted upon protected company data lists to gain an unfair competitive advantage. Castro’s legal defense team has not issued a response to the allegations presented by Schwab. This case was brought forth by Schwab on January 7, 2013 and there has been no ruling issued in this case to date. The factor that may affect the outcome of the case is whether or not Schwab can prove that Castro’s company has in fact lured investors away from Schwab based on Castro’s knowledge of said investors because of his employment at Schwab. If they can do so, it is
He transferred funds from WHA to his personal bank account and other accounts he had access and control too. Richard understated the amount of unpaid payroll taxes of WHA and its subsidiaries and by overstating the amount of loans made by him to WHA. As a result the financial statements and records were manipulated. He also directed purchasers of new issued shares to transfer the funds of the shares to accounts under his control. Around $6 million was taken and spent. The market value of WHA and the earnings per share were also inflated and overstated as well. This happened because of Richard falsely giving records to the SEC, WHA shareholders, and perspective new purchasers of stock by understating the real number of outstanding shares in the company’s financial statements. World Health Alternatives lost $41 million in total from all of the fraudulent activity.
The Court found that Cuban had not “misappropriated” any material non-public information because he had not violated a “legal duty to refrain from trading. Cuban had not promised that he would not trade after learning about a PIPE offering. The judge also said that the SEC failed to show that Cuban undertook a legal duty to not use the information he learned from those two phone calls with Mamma.com representatives. Mark Cuban did not have any fiduciary duty to not act upon the information. The Mamma.com CEO asked Cuban to keep their conversation confidential. However, that didn’t prove that Cuban had a legal duty to Mamma.com that would prohibit him from selling his shares based on what he was told. He just promised to not disclose the information to the others, not promised to not act upon what someone told him.
an American was outraged that asylum was denied to Fidel Castro’s two sisters but not to
and the parent system and CEO on federal, criminal charges regarding violations of the Medicare Anti-Kickback Act in connection with recruitment of healthcare providers. The consciousness has definitely been raised among corporate CEOs and CFOs to insure the integrity of the firm and all its affiliates (Levine & Short,
That is said to be insider trading, having received any type of information that was not made available to the public. I don’t understand why the stock broker, who worked for her and got a commission for what he does. His job was to ensure that her portfolio stayed profitably healthy and looking good. But the Securities and Exchange Commission had a different view about the situation and started an investigation of these particular activities. I don’t know if Ms. Stewart really thought she was doing anything wrong at the time but her values seemed to be that of what ever can protect her and her money by any means necessary that’s what she would do. It would seem money was in her top three of things she valued. However I don’t know how many people who found out that the President of a company that they owned stock in was selling his stock and not try to sell theirs also, regardless of how they found out. The President of Imclone had his daughter start selling off stock, and that raised a red flag. As the investigation proceeded it was inevitable that they would get to Ms. Stewart, but she was forewarned by her stock broker once again.
Both parties consulted their attorneys whose guidance instructed them that they did not have to disclose the information. The motivating factor in both decisions was to protect the livelihood of their companies. The facts of the information that had been revealed to each company had not been proven.
In Romanelli v. Citibank, Romanelli sued Citibank over claims of negligence following the embezzlement of money by Schor, Romanelli’s financial advisor. Romanelli contended that Citibank was liable for allowing Schor’s actions. Both the New York trial court and New York appellate court found in favor of Citibank, stating that Romanelli was liable for Schor’s actions since Schor was Romanelli’s agent (Melvin & Katz, 2015, p.321).
This court has subject matter jurisdiction over this action pursuant to 28 U.S.C. 1331 for civil actions arising under the Constitution, laws, or treaties of the United States and 28 U.S.C. 1332 due to a complete diversity of citizenship between Plaintiff and Defendant and the amount in controversy exceeds $75,000, exclusive of interest and costs.
The court could not have used the Ultramares doctrine because GKCO was not in privity relationship with the bank or any other third parties.
Without exception, insider trading relies on two elements: the existence of a relationship that gives access to corporate information, either directly or indirectly, not meant for the personal benefit of anyone, and unfairness involved in a person taking advantage of information knowing it is unavailable to those with whom he is dealing. In SEC v. Texas Gulf Sulphur Co., the Cady ruling was supported specifying that anyone with insider information is required to disclose the information or refrain from trading3. Consequently, the court held that anyone trading on insider information was committing fraud against all others in the market. The US Supreme court reversed the criminal conviction in the case of Chiarella v. United States, a printer in the possession of nonpublic information regarding a M & A documents that he was hired to print4. The SEC then instituted rule 14e-3 of the Exchange Act in which it became illegal for anyone to trade upon material nonpublic information … if they knew the information was from an
Also we know that Daniel Berman was the Finance Director at the company. His issue was he felt some of the accounting practices violated SEC regulation. By relaying the information to a senior officer, he is considered a whistleblower. As the Finance Director, all dealings in the finance/accounting department(s) fall on him whether right or wrong. I believe he was justified in relaying the information based on how it could eventually negatively affect the company. With him being terminated, he decided to sue his former employer and the case was dismissed in the United States District Court for the Southern District of New York. As a result of the case being dismissed it was then filed with the United States Court of Appeal Fifth Circuit and ruled the judgment reversed and case remanded. Under Sarbanes-Oxley, Berman is protected because he was retaliated against for reporting suspected corporate fraud. In this case, Berman sued on the basis of the retaliation policy in Dodd-Frank related to the definition of a whistleblower in Sarbanes-Oxley. Dodd-Frank and Sarbanes-Oxley are so similar that either way he was protected in his
believed to have become a monopoly. Joel Klein was the lead prosecutor for the case. So the
Mellon Bank N.A. This case was created over the validity of an old negotiable instrument, and whether or not Kim Griffith was a holder in due course or not. Mr. Griffith had stumbled upon a certificate of deposit issued by Mellon Bank for the amount of $530,000. In addition to discovering the certificate, it was entitled “Negotiable Certificate of Deposit, No.1-48346.” Griffith found the negotiable instrument inside an old book he had purchased while he and his wife cleaned out there storage unit in Largo, Florida. Griffith was unable to verify the price he paid for the book, or the name of the seller. Griffith proceeded to take the instrument to Pittsburgh, Pennsylvania to claim the money as a holder in due course. When Griffith presented the instrument to the Mellon Bank, they denied the repayment of the instrument. As a result, charges were brought against Mellon Bank for the repayment of the certificate of deposit in the amount of $2.5 million after
After watching and listening to Stephan A. Cohen story and testimony, I realized that the jurisdiction flaws may have been a possible reason which prevented his indictment. Furthermore, a person, in his position should have not attempted using for his defense that, the notion of federal regulations and compliances were ambiguous regarding the insider trading operations in his company. Thus, as the pioneer of the former SAC, Inc, hedge fund, Stephen A. Cohen remained oblivious of all accusations brought up against him because his counsel may have suggested that playing the ignorance card would the best option to avoid the indictment. Ironically, the defendant, at no time ever lost his investment rights. So, he went ahead and created “Point72 Asset Management”, he listed as a private company, to allow him to resume his business. Finally, in January 2016, Cohen successfully reached a settlement agreement, with the Security and Exchange Commission, in the amount of 1.8 billion in fines, meanwhile, limiting him to manage outside money for only two years. In reality, the founder of SAC, Inc, figured out one more time a way to bypass the SEC ruling with the creation of Stamford Harbor Capital his previous company’s executives supervise.