Question: 1 Although Platt did not intend on disclosing the information

1. Although Platt did not intend on disclosing the information to Switzer, could Platt’s choice to discuss confidential corporate matters with his spouse in a public place where one could easily overhear him constitute the requisite breach of duty required for a tipper-tippee case?
2. The SEC never appealed this case. Do you believe that the SEC prosecuted Switzer because of his high profile?
3. Did Switzer’s partners have a legal and/or ethical duty to inquire about the source of Switzer’s information?

Switzer inadvertently overheard Platt, an executive at TIC discuss highly confidential information about one of TIC’s subsidiaries, Phoenix, in a casual conversation with his wife while in the bleachers at a track meet. The next day Switzer convinced several investors to form a partnership for the purposes of purchasing large amounts of Phoenix stock, which neither Switzer nor his partners ever heard of. Ultimately, Switzer and his partners earned a substantial profit from the purchase and sale of the stock and after an investigation, the SEC filed a complaint alleging that Switzer was a tippee in violation of rule 10(b)(5) of the ’34 Act.

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  • CreatedNovember 06, 2014
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