Berner and a number of other investors purchased stock from
Berner and a number of other investors purchased stock from a San Francisco– based stock brokerage firm known as Bateman Eichler by getting an inside tip from one of the brokers employed by the firm ( an illegal practice called trading on insider information). Based on the tip, the stock would rise in value, and the investors would make a large profit. When the tip turned out to be false, Berner and the other investors sued the stock brokerage firm for its losses because the market price of the stock fell far below the prices they paid for it. The trial court dismissed the complaint, concluding that the agreement to purchase the stock was illegal because the parties to the lawsuit were in pari delicto. Consequently, the plaintiffs were absolutely barred from recovery. An appeals court reversed the lower court’s ruling and claimed that, regardless of the in pari delicto ruling by the lower court, Berner and the investors could still collect. Bateman Eichler appealed this decision to the U. S. Supreme Court. Should the Supreme Court decide in favor of Bateman Eichler, the stock brokerage firm?
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