Assignment 4 – Critical Thinking and Writing Assignment

Assignment 4 – Critical Thinking and Writing Assignment
see page 636 – Problem 21-8 Business Law Critical Thinking
Answer the three questions as an individual even though it mentions “groups”:

Specific Requirements :
Papers should be a minimum of 750 words (approx. 3 pages) to a maximum of 1,000 words. Use the word count feature in Microsoft Word.
Remember: 750 words is a “minimum effort” and will earn less points that other submission of great depth
Do not use Wikipedia for legal references. Points will be deducted if you do. Use legal texts, journals, resources, our textbook, etc.
References may be footnoted – at the bottom of the page using numbers. Otherwise, just include a Bibliography of references as a separate page. Do not list just webpage addresses. The title of what is being referenced must be shown.
Strong readability (this means correct spelling, grammar, capitalization, written in a research style not as a conversation, etc.)
Please note: Personal, opinion-based discussions and those that read like a conversation with a peer (using “I”, “you” and “we”) are not acceptable. Write using the third person – like the text book.
Please Remember: The more research, writing, and analysis provided by the student increases the possibility for earning more points.
636 Business Law T° day: The Essen ials
¯¯For a samp1e answer to Prob1en121-5,go to Appendix H
at the end ofthis text
D;scIosvre vnder sEC RvIe10b¯ 5 D dona I`LLc,invested
$4million in tw° securitles ollerings flom Go1dman,sachs&
Co The investlllents
`ere in collatcrahzcd debt obhgations (CD sl Thcir va1uc depcnded n re denti mortgage-backed
securities(Rlv Bs), Jhose ·alue in turn depended on the pe
investlncnts in the subprimc lnarkct;in
: ;::f F 9:::
`hich it had invested heavily To li1nit its risk,Goldman began betting against sub~
prin e mortgages,RMBs,and CDos,induding the CD s
it had sold to Dod na In an internal e-mail, one Goldman
ofscial commcnted that the company had managed to(n1ake
8me kmonade om some b old lCmo N ·ertlleless,
Goldman rnarketing rnaterials provided only boilerp1ate statcments
about the risks ofinvesting in the securities The CD s
were1ater do v graded to junk status,and Dodona suffcred a
malor lo“ while Goldman pro ted A$umlllg tllat Go1dman
did not a rmatively misKpresent any hcts about the CDos,
can Dod na still rec° ver under sEc Rule 10b~5 If so,h ` [Dodo dr,LLc v G md ,sdchs&Co,847Fsupp2d624
(sDNY20]2)l(see pages618~62 )
A Qves” n of EIhks-Vi° l¤ °ns of Ihe1934Ac
N/lelvin ttle told John s/lontana and Paul Knight about a “Trading Program” that purportedly fou1d buy and scllsecu~
llties in dcals that wele ltll insulcd,as well as monitoled
and contro1led by thc Federal Resc` BOard NVlthout checr
ing the detai‘ or e nx,enfy ng whether the program existed~
Montana and Knight, h Iyttle‘ hdp,bcgan to se11interes‘
in the program to invcstors For a n1inlmum investment of

t
‘ould“utihze banks that can ensure ful1bank integnty of

The Transaction lvhose undertaking[sl are in comp1ete ha
mony lvlth international banking ru1es and protocoland who
lcl guarantee maxlmum secun,of a Funderb capltal
P1acement Amount” Noth1ng as required but the investors¯
funds and their silence~¯the pr° gran1 /as to be kcpt secret
ver a fou month penod,M ntana ralsed nearly$23mn~
hon from t venty-tuzo invcstors The pro 1ised gains did nOL

l The securities and Exchange c° mlnission(SEC)nled a

suit aga nst Montana alleglng olations of Scction10(b)
and SEC Ru1c1ob~5 hat is requircd to estabhsh a violation
of these1asvs Explain how and wh,z the facts1n thls
case rneet,or%il to lneet,thesc requirements
2 Ultlmately about half of the investors rccoupcd the
amount thcy had invcsted Should thc Others be con~
sidercd at least pardy responsible for their0 n losses
D1scuss
Cr ical Thinking and Writing Assignments
9I^:
ated and approvcd his cmpl°
:;1 :1IIlt
yerb cxtensions of credit to ch~
: :
en‘ These respon6ibilities gave Svoboda access to nonpubhc
infomat10n aboutthe clIents’ earllings,perfomance,acquisitions,and
business plans flo 1consdcntial lnemOs,e-1na1l,
and othcr sources Svoboda del sed a scheme th A1ena
Robles,an independent accountant,to use this infonnatlon
to trade secunrles Pursuantto thcir schcme,Robles tradcd in
the secuntles fm°re than t /enty diffcrent companies and
pro ted by morc than$2mmlon sv b da also cxecutcd
trades for hls owll pront fm re tllan$8o0,000,despite thelr
agreement that Robles would do all ofthe tlading
`re that
their schcme vi° lated Roguc Banko pohcy thcy attcmpted to
conducttheir trades to avoid suspicion
`/hen the bank ques~ tioncd svob°da about his actions,he lied,reftlsed to coopc
ate,and xv,as red
1 The nrst group /ill detern inc
`hether svoboda or Roblcs conunitted any crimcs
2 The second gr up
`ill decide
`hether Svoboda or Robles ale sublcct to ci ` hab11ity If so,who could
nle a suit and on /hat ground Vhat are the possible
sanctionsP
3 A third group wm idenu any defenses that svob° da
or Robles could raise,and deterl,line their likehho° d of
success