Thursday, November 7, 2013

Securities and Exchange Commission v. Datronics Engineers, Inc. case brief

Securities and Exchange Commission v. Datronics Engineers, Inc. case brief summary
490 F.2d 250, cert. denied 416 U.S. 937 (1973)

CASE SYNOPSIS
Appellant challenged decision of United States District Court for the District of Maryland, at Baltimore, that granted summary judgment in favor of appellees in appellant's action that sought preliminary injunction to restrain appellees from continuing in alleged violation of 15 U.S.C.S. §§ 77e and 78j and 17 C.F.R. § 240.10b-5.

CASE FACTS
Appellant sought a preliminary injunction to restrain appellee corporation, its officers, and agents from continuing in alleged violation of the registration and antifraud provisions of the Securities Act of 1933, 15 U.S.C.S. § 77e, the Securities Exchange Act of 1934, 15 U.S.C.S. § 78j, and Rule 10b-5 of the Securities and Exchange Commission, 17 C.F.R. § 240.10b-5. Summary judgment was entered in favor of appellees and appellant challenged the decision.

DISCUSSION
The appellate court vacated the lower court's dismissal and remanded the cause for an entry in appellant's favor for the preliminary injunction originally sought. The court found that the "spin-offs" violated § 77e of the Securities Act of 1933. The court found that the transactions were considered to be sales. The court also found that appellees had made misleading statements and, since the transactions were deemed to be sales, the misleading statements were outlawed by § 78j of the Securities Act of 1933 and Rule 10b-5 of the Securities and Exchange Commission, 17 C.F.R. § 240.10b-5.

CONCLUSION
The appellate court vacated the lower court's dismissal order and remanded the cause for the entry of judgment that sustained appellant's motion for the preliminary injunction.


Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials

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