Question: Jonas Bravario hires Suzanne Hermano a securities broker to manage
Jonas Bravario hires Suzanne Hermano, a securities broker, to manage his $700,000 portfolio of securities. When Bravario managed his own investments, his investment strategy was to own a large number of different companies, with no one company representing more than 5 percent of his total investments. Bravario also purchased all his investments for cash and did not borrow money to finance the purchase of any investment. Hermano is aware of Bravario's historical investment strategy, which Bravario informed Hermano that he wanted to continue in the future. Nonetheless, Hermano opts to purchase 1 million shares of Enron Corporation for $70,000. To finance the purchase, Hermano sells $40,000 of Bravario's current investments and borrows $30,000 from Wells Fargo Bank in the name of Bravario. The interest rate on the loan is 10 percent. When Bravario discovers the purchase and the loan, he attempts to repudiate both contracts. Is Bravario liable on the Enron purchase and loan contracts?
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