Friday, November 22, 2013

Sennott v. Rodman & Renshaw case brief

Sennott v. Rodman & Renshaw case brief summary
474 F.2d 32 (1973)


CASE SYNOPSIS
Appellant sought review of the judgment of the District Court, awarding appellees damages plus prejudgment interest, holding appellant vicariously liable for the damages caused by a former associate and son of a partner of appellant in an action alleging securities violations.

CASE FACTS
Appellant was held vicariously liable for the fraudulent misrepresentations of a former associate and son of a partner of appellant. Appellant contended that the actions of its former associate could not be imputed to them because appellant had no knowledge of the deception.

DISCUSSION

  • The court agreed, holding that there was no evidence that appellant did anything to induce appellees to subject themselves to the former associate's defalcations, nor did it have any knowledge until after the fact. 
  • Appellees, upon recommendation of the former associate, refused to cooperate with appellant's inquiries into the fraudulent stock option transactions. 
  • The damage that the former associate inflicted on appellees was a result of appellees' misplaced reliance upon the former associate and not appellant. 
  • There was no evidence supporting appellees' theory that the former associate's father had knowledge of his son's scheme, which was imputed to appellant, nor their theory of apparent authority.

CONCLUSION
The judgment holding appellant vicariously liable for the damages caused by a former associate and son of a partner of appellant involving fraudulent securities manipulations was reversed and the case remanded because the damage to appellees was a result of their misplaced reliance on the former associate and not appellant.

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