Sunday, November 24, 2013

CBI Industries, Inc. v. Horton case brief

CBI Industries, Inc. v. Horton case brief summary
682 F.2d 643 (1982)


CASE SYNOPSIS
Defendant director appealed an order from the United States District Court for the Northern District of Illinois, which rendered a judgment in favor of plaintiff corporation in an action under § 16(b) of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78p(b).

CASE FACTS
Plaintiff corporation brought an action against defendant director under § 16(b) of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78p(b). A trial court rendered a judgment in favor of plaintiff. Defendant appealed.

DISCUSSION

  • The court reversed and remanded, holding that the profit realized by a corporate insider meant direct pecuniary benefit to the insider. 
  • The court determined that it was not enough that ties of affinity or consanguinity between the nominal recipient and the insider made it likely that the insider would experience an enhanced sense of well-being as a result of the receipt, or would be led to reduce his gift-giving to the recipient. 
  • The plaintiff had made no effort to prove a direct pecuniary benefit to defendant. 
  • The court rejected the view that the profit nominally received by a third party had to be attributed to the insider either entirely or not at all.

CONCLUSION
The court reversed and remanded a trial court's judgment in favor of plaintiff corporation in an action under the Securities Exchange Act of 1934 against defendant director because the profit realized by a corporate insider meant direct pecuniary benefit to the insider. The court rejected the view that the profit nominally received by a third party had to be attributed to the insider either entirely or not at all.


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