Operation Managment Essay

399 WordsMay 6, 20122 Pages
Applying the family resemblance approach, the notes at issue are "securities." They do not resemble any of the enumerated categories of nonsecurities. Nor does an examination of the four relevant factors suggest that they should be treated as nonsecurities: (1) the Co-Op sold them to raise capital, and purchasers bought them to earn a profit in the form of interest, so that they are most naturally conceived as investments in a business enterprise; (2) there was "common trading" of the notes, which were offered and sold to a broad segment of the public; (3) the public reasonably perceived from advertisements for the notes that they were investments, and there were no countervailing factors that would have led a reasonable person to question this characterization; and (4) there was no risk-reducing factor that would make the application of the Securities Acts unnecessary, since the notes were uncollateralized and uninsured and would escape federal regulation entirely if the Acts were held not to apply. 41.7 Insider trading is immensely tempting. Anyone with reliable secret information can earn millions of dollars overnight. Hoodes did not possess material nonpublic information about Sullair when he sold or purchased the securities of the company. So the corporation will not recover from his profit. If hoodes uses material nonpublic information to make the profit, in this case Hoodes would be punished by a fine up to &1.1 million and prison sentences of up to 10 years. He may also be forced to turn over to the SEC three times the profit made. 51.5 I think if Coopes knew or should have known that the audits would be used by investors then they could be held liable if the audits weren't done properly. The Ultramares Doctrine would require privity between the investment company and the accountants and, under that doctrine, Coopes would not be liable. 51.7

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