Organizations 1. A/P Disclosed v. Undisclosed Determining authority when a 3rd party is concerned 2.

2. Partnership General Everyone is in the tank Limited (must have a general partner) 3. Closely Held To keep closely held, you may want to restrict the ownership interest, i.e. the equity stock 4. Limited Liability CC (Mix of Partnership & Corp.) 5. Corporation ( gives you the opportunity to raise capital differently) State sanctioned Statutory Req. Organizing state

1. Short Sale Borrowing shares, selling it at $25, then buying it later for a lesser price IE $20 a share and selling it back to the company at the cheaper price and keeping the difference 2. Call A circumstance where you pay for the right to buy stock at a certain price 3. Put A circumstance where you pay for the right to sell stock at a certain price

Convertible Preferred Stock Debenture Disclosure Purpose o To satisfy statutory requirement o To make investors feel good so that they will invest Some securities may be exempt from registration & disclosure A bond issued by a corp in which corp agrees to make stated payments over a period. Usually a fund and a trustee is appointed to manage Typically preferred stock gives up the option to vote except if your enot paid dividends, you convert it to voting common stock

West v. Prudential Most securities are bought and sold by major players This is such a small transaction that 6 or 7 people buying some shares could not have affected the market price. So the theory is whether or not the market was affected by the transaction

Santa Fe vs. Green Delaware Section 253 Form of short form merger o If I own 90% of company A, I can (in a sense) force a merger of company A into me. The 10% can demand an appraisal if they do not agree with the value of the stock. o Here, the Pf could not show that the Df failed to disclose/mislead/or engaged in any other conduct that was not fully disclosed.

Deutchmann v. Beneficial Pf argues that officers of the company mislead him by characterizing the wellbeing of the company. Pf bought the stock, later discovered the company was not in that great a shape and he sued Was there any duty owed to pf? Did directors benefit in anyway? Was there any other relationship between buyer and seller per se?

Lets assume Abel worked as a parking lot attendant at a television studio. He got to know staff at the station and the personalities who filmed, and he got to know a fair number of celebrities who filmed. The leading show was a show modeled after that of Oprah. Abel, in his capacity saw many major personalities come and go. He also watched the show and knew a number of things. He knew that the hostess of the show had the ability to endorse a book/product/food and things just took off. Abel began to observe that folks came to the show and not long thereafter, their products tended to take off. He began to make mental notes of this. One day he observed a person who parked their car and he knew THROUGH HIS OWN READING that this person had a product on the market which, added to any meat sauce, made everything wonderful. He knew they were headed to the show. Abel got on the phone, called his broker, and said, Buy 1000 shares of Acme. Sure enough, the stock was rolling a week later. Is our friend able subject to suit under 10(b)(5)?

No relationship, no duty, Not an insider. He just made a decision based upon his independent analysis.

Where an intern is working there and An individual worked in a freight yard, and part of the yard, the freight cars were assembled for shipment and routing all up and down the east coast. He observed these freight cars and after a while, he began to understand what commodities were in each freight car. He figured out that if traffic was light in the commodity then business was down and if commodity was heavy then the producers of the products, the sellers of the products and the railroads were all going to do well. So he went and bought stock of all 3. The SEC said he was trading on proprietary information. He said, he had not been tipped, how could he be punished for his hard work & diligence?