In SEC v. Ginsburg, Ginsburg was CEO of a company that merged ...

[hbsimmons88]

In SEC v. Ginsburg, Ginsburg was CEO of a company that merged with another company, and he told his relatives that the merger might occur. Knowing that the stock price might then rise, the relatives bought stock in the company and profited. Ginsburg was prosecuted by the SEC for insider trading. The appeals court held that:
 a. there was not enough evidence to reasonably permit the inference that Ginsburg conveyed nonpublic information to his family members, so he was not liable for securities fraud
  b. Ginsburg did not use the information himself so there was no fraud
  c. Ginsburg did not have a fiduciary obligation to the company, so could not be guilty of insider trading
  d. Ginsburg had a fiduciary obligation to the company, but his conduct could not be proven to have violated it e. none of the other choices are correct

Question 2

Mitigation of Damages. William West, an engineer, worked for Bechtel Corp, an organization of about 150 engineering and construction companies, which is headquartered in San Francisco, California, and operates worldwide. Except for a two-month period in 1985, Bechtel employed West on long-term assignments or short-term projects for thirty years. In October 1997, West was offered a position on a project with Saudi Arabian Bechtel Co (SABCO), which West understood would be for two years. In November, however, West was terminated for what he believed was his age and lack of display of energy. After his return to California, West received numerous offers from Bechtel for work that suited his abilities and met his salary expectations, but he did not accept any of them and did not look for other work. Three months later, he filed a suit in a California state court against Bechtel, alleging in part breach of contract and seeking the salary he would have earned during two years with SABCO. Bechtel responded in part that, even if there had been a breach, West had failed to mitigate his damages. Is Bechtel correct? Discuss.

[kaillie]

Answer to Question 1

e

Answer to Question 2

Mitigation of damages
The court awarded West damages that included 216,852.27 for his salary through October 1999 (two years with SABCO), but determined that West through reasonable efforts could have earned 165,000 by comparable employment, and reduced the salary award to 51,852.27. Bechtel appealed to a state intermediate appellate court, which reversed the lower court's decision and directed the entry of a judgment in favor of Bechtel. On the question of West's mitigation of his damages, the appellate court stated, An employee damaged by the breach of an employment contract has a duty to take steps to minimize the loss by making a reasonable effort to find comparable employment. An employee's recovery is reduced by the amount which the employer affirmatively proves the employee . . . with reasonable effort might have earned from other employment. . . . Since it is indisputable that West was offered comparable, or substantially similar, employment, and he admittedly made no effort whatsoever to pursue such employment, it must be concluded that he failed to mitigate his damages as a matter of law; any other result would ignore the obligation to mitigate.

[hbsimmons88]

Correct answers!

[kaillie]

Great! Please up vote