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Superintendent of Ins. v. Bankers Life & Cas. Co., 404 U.S. 6 (1971)
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General SummaryThis case is from a collection containing the full text of over 16,000 Supreme Court cases from 1793 to the present. The body of Supreme Court decisions are, effectively, the final interpretation of the Constitution. Only an amendment to the Constitution can permanently overturn an interpretation and this has happened only four times in American history.
Superintendent of Ins. v. Bankers Life & Cas. Co., 404 U.S. 6 (1971)
Superintendent of Insurance v. Bankers Life & Casualty Co. No. 70-60 Argued October 13, 1971 Decided November 8, 1971 404 U.S. 6
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Syllabus
Petitioner, liquidator of Manhattan Casualty Co., alleged that the company was defrauded, in violation of federal securities laws, by a fraudulent sale of securities owned by it. Manhattan’s sole stockholder agreed to sell all of its Manhattan stock to one Begole for $5 million. Begole conspired with others to use United States Treasury bonds owned by Manhattan to pay for the shares. Through a deceptive device, the bonds were sold and the proceeds used in the purchase of the stock. The depletion of Manhattan’s assets was concealed by the purported transfer to it, in exchange for the proceeds of the bond sale, of a certificate of deposit which, in fact, had been assigned by Manhattan’s new president, a coconspirator, to another corporation, and by it used as collateral for a loan. The District Court dismissed the complaint and the Court of Appeals affirmed, finding that "no investor [was] injured" and that the "purity of the security transaction and the purity of the trading process were unsullied."
Held: Section 10(b) of the Securities Exchange Act of 1934 makes it unlawful to use "in connection with the purchase or sale" of any security "any manipulative or deceptive device or contrivance" in contravention of the Securities and Exchange Commission’s rules and regulations. Section 10(b) prohibits the use of any deceptive device in the "sale" of any security by "any person," and it is irrelevant that Manhattan was a corporation, rather than an individual investor; that the fraud was perpetrated by a corporate officer and his outside collaborators; that the transaction was not conducted through a securities exchange or an organized market; that the proceeds due the seller were misappropriated; and that the creditors of the defrauded corporate seller may be the ultimate victims. Pp. 9-14.
430 F.2d 355, reversed.
DOUGLAS, J., delivered the opinion for a unanimous Court.
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Chicago: U.S. Supreme Court, "Syllabus," Superintendent of Ins. v. Bankers Life & Cas. Co., 404 U.S. 6 (1971) in 404 U.S. 6 404 U.S. 7. Original Sources, accessed May 20, 2024, http://www.originalsources.com/Document.aspx?DocID=4PQV8SFGUEKLU73.
MLA: U.S. Supreme Court. "Syllabus." Superintendent of Ins. v. Bankers Life & Cas. Co., 404 U.S. 6 (1971), in 404 U.S. 6, page 404 U.S. 7. Original Sources. 20 May. 2024. http://www.originalsources.com/Document.aspx?DocID=4PQV8SFGUEKLU73.
Harvard: U.S. Supreme Court, 'Syllabus' in Superintendent of Ins. v. Bankers Life & Cas. Co., 404 U.S. 6 (1971). cited in 1971, 404 U.S. 6, pp.404 U.S. 7. Original Sources, retrieved 20 May 2024, from http://www.originalsources.com/Document.aspx?DocID=4PQV8SFGUEKLU73.
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