Securities and Exchange Commission, Case Study Example

Facts

Anthony Materia works for a firm that issues tenders. Given the opportunity to produce and open tender offers to the public, Materia has the power to manipulate information to be able to gain personal profit from the said operations that his company engages with. There were instances during his work time that he was able to see how his superior works and how such activity is something that goes against the rules of the Securities and Exchange Commission policies. Relatively, instead of calling for the case to be forwarded for investigation, Materia took the chance to further impose on how he could engage in the scrupulous act himself. In short, he saw the personal benefit of the said transactions, and somehow, he got attracted to the concept of earning something more for himself through engaging in unprecedented procedures and kept the situation as much as he could from the authorities.

For quite some time, his approaches to the situation worked well; however, the increase of his properties and the developmental process by which his lifestyle has abruptly changed within a short span of time increased alarm among his colleagues and some of his administrators; causing them to take note of the need to investigate on the matter. Through investigation, it has been found that most of his ill-gotten wealth came from scrupulous operations especially in terms of dealing with the release of unauthorized tender offers that were already distributed to several clients he served while he was on duty.

Along with this, he is also accused for sharing valuable [and confidential] information about his employer; from which he was able to gain as much profit as possible. Although he mentions that he had no idea of the nature of the information being confidential and highly valuable to his employer, the fact that he used it to earn money from his transactions imposes that he knew that it has some worth for his employer that people are willing to pay for such information.

Issue

While there were several scrupulous activities that Materia has been considered to have been involved in, it could be noticed that it was his engagement in the disclosure of important [and confident information] about his employer that has made the situation rather worse. It was his willingness to disclose such information and gain personal profit from it that made the act punishable. The alibi of the defendant of not knowing of the confidential nature of the data is voidable especially that he knew how to use it for the sake of personal gains.

Decision

Through the course of identifying the reasoning pattern of Materia and how it relates to his actions, the court rules the action of the defendant scrupulous and is duly punishable by the sanctions of the law in consideration with SEC Rule 10b-5 and SEC Rule 14e. These policies outline the need of employees working for the release of tender-offers in the securities exchange industry to be careful about any particular information they would disclose to their clients. The protection given to the employer of Materia is strongly dependent on the course by which the authority towards such data belongs to the employer and using it on the part of Materia is generally evasive in nature especially that it involves private information that could implicate the employer in scrupulous acts that are not considered to be completely evasive by the law.

Reasoning

Practically, the law does provide protection to the rights of the people to keep control of private information that defines their being, their role and their standing in the communities they exist with. It could be understood that somehow, it is the emergence of such improvement of the law that the right of Materia’s employer to private data being kept within his care is honored accordingly. Since the case is not about the employer’s acts but that of the misalignment of Materia’s recognition of his role I the organization he works with, the value of the data [no matter how scrupulous it may have seemed] was set aside during the hearing.

Observation                                                        

Private data about a person or whatever he may be doing is honored as a form of property that no one else should be able to disclose except for the person himself. It could be understood that in this case, such concept of private property has been considered fully, especially that it has already involved a sense of monetary-value-exchange that the defendant has been involved in. Practically, the way the court handled the case could be noted as focused as it did single out the actions taken into account by Materia apart from the supposedly scrupulous acts that his employer has incurred [which he protects with the information shared or disclosed by Materia to his clients].

Work Cited

Cioppa, Paolo (2009) “Unexpected Insider Trading Abuses and the Need for Revision of Rule 10b5-1(c),” Global Jurist: Vol. 9 :Iss. 1 (Topics), Article 5.