Friday, November 22, 2013

Smolowe v. Delendo Corp. case brief

Smolowe v. Delendo Corp. case brief summary
136 F.2d 231 (1943)


CASE SYNOPSIS
Defendants, a corporation and corporate officers, appealed a decision of the United States District Court for the Southern District of New York, which entered judgment in favor of plaintiff stockholders in their action brought under § 16(b) of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78p(b).

CASE FACTS
The stockholders brought an action against defendants under § 16(b) of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78p(b), after the corporate officers realized profits from various security trades made within a six-month period. Judgment was rendered in favor of the stockholders, and defendants appealed.

DISCUSSION

  • The court affirmed on the grounds that the Act imposed liability upon an objective measure of proof, not the subject standard suggested by defendants. 
  • The court also held that the profits realized were properly calculated under the Act as the difference between the lowest price in and the highest price out within the six-month period. 
  • Finally, the court held that the stockholders were entitled to recover their attorney's fees from the corporation, because the action was brought on its behalf and for its benefit.

CONCLUSION
The court affirmed the judgment in favor of the stockholders on the grounds that the amount to be recovered was properly calculated as difference between the lowest price in and the highest price out. Attorney's fees were recoverable from the corporation because the action was brought on its behalf and for its benefit.


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