The 5th Circuit explained that, in Daniel, the Supreme Court determined that an employee’s “participation in a noncontributory, compulsory pension plan” is not the equivalent of purchasing a security. The plaintiffs contended there was a “sale” because the grant of the Enron options was “for value”-the provision of services through employment. Relying on the same distinction, the plaintiffs maintained that the Securities and Exchange Commission (SEC)’s “no-sale doctrine” for employee benefit plans does not apply to employee stock option plans. Daniel to determine whether such an interest would be a security was inapplicable. Supreme Court in Int’l Brotherhood of Teamsters v. This meant the test established by the U.S. While an employee benefit plan requires a court to determine whether the beneficiary interest is a security, the plaintiffs asserted that the stock options here are securities under the statutory definition. The plaintiffs contended that the district court erred by conflating employee stock ownership plans (ESOPs) and employee stock option plans. ![]() However, the parties disputed whether the Enron employee stock option plans amounted to a sale of securities within the meaning of the statute. They also allege that UBS had knowledge of Enron’s “financial chicanery” because of its “long-standing banking history with Enron.” The Appellate Court noted that, under Section 11, an underwriter can be liable to a person who acquires a security where the registration statement “contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein.” Under Section 12, any person who “offers or sells a security” in a company whose prospectus or oral communication “includes an untrue statement of a material fact or omits to state a material fact necessary in order to make such statements, in the light of the circumstances under which they were made, not misleading,” is liable to the person “purchasing such security from him.” Specifically relating to the employee stock options, the plaintiffs claimed violations under Sections 11 and 12 of the Securities Act of 1933. They alleged that PaineWebber violated the Securities Act by serving as a “seller” and “underwriter” of Enron securities within the meaning of that statute, making PaineWebber liable for “materially false statements contained in the Enron prospectuses and registration statements” for the company’s stock. ![]() They contended that defendants’ acts, practices and course of business combined to operate a fraud upon the plaintiffs, deceiving them “into believing the price at which they purchased or held their Enron securities was determined by the natural interplay of supply and demand,” according to the court’s opinion. They also claimed the information and knowledge it possessed during the class period concerning the manipulation of Enron’s public financial appearance. ![]() The plaintiffs claimed UBS violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder by failing to disclose the conflicts under which it operated its brokerage business. PaineWebber was tasked with facilitating the exercise of options and providing recordkeeping services related to that process. The case involved two classes of plaintiffs: individual retail-brokerage customers of PaineWebber who purchased Enron securities and Enron employees who acquired employee stock options. Circuit Court of Appeals has affirmed a lower court’s dismissal of charges against UBS Financial Services, formerly UBS PaineWebber, for failure to disclose material information about Enron’s financial manipulations. ![]() In a case resulting from the collapse of Enron, originally filed in 2002, the 5th U.S.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |