Nature of the Case
To access this section all you need to do is click here and register.
Facts
Ds were partners at the law firm representing National and participated in the drafting of a “lease maintenance plan” (LMP), a contingent financing plan, which, when triggered, would cause the dissolution of the company. The effect of the implementation of the LMP on National's operations and growth would obviously be both dramatic and devastating. The LMP was 'a sort of a holding pattern short of bankruptcy or levy by the creditors.' The LMP required National to terminate all sales activities, dismiss all sales personnel, and limit its operations to those necessary to service existing leases. In effect, the company would be transformed into a mere service agency, maintaining existing leases, but writing no new ones. D drew up a press release after the LMP was signed which did not discuss matters then within the knowledge of D on how devastating the LMP was to National's business. National’s CEO, Hart, declined to release a Form 8-K revealing the LMP’s existence. Hart was urged by Ds to disclose the LMP’s terms, but Hart refused. The LMP was triggered and it was then that Hart, in blatant opposition to their advice, asked the attorneys to draft an opinion declaring the disclosure of the LMP was unnecessary. Ds refused, and Hart resigned soon after. An action was brought against Ds alleging that they aided and abetted Hart’s illegal nondisclosure. The Administrative Law Judge concluded that Ds should be suspended from appearing or practicing before the Commission for periods of one year and nine months, respectively.
Support@ bsmsphd.com
Casebriefs Co