Bart and His Brother-In-Law, Ted, Owned a Small Corporation

question 12

Essay

Bart and his brother-in-law, Ted, owned a small corporation. Ted was basically an investor, and Bart ran the entire business. As Ted became increasingly remote from day-to-day operations, Bart began to falsify some records so that Bart could take a greater share of the profits. This continued for years with Bart mailing falsified financial statements to Ted. When Bart suddenly became ill, Ted was forced to assume a greater role in the business on a temporary basis. During this time, Ted discovered the past deceptions and sued Bart under Rule l0b-5 of the Securities Exchange Act of 1934. Bart defended on the procedural ground that the business was local and had never been involved in interstate transactions of any kind. Moreover, the corporation was not listed on any stock exchange, nor did it have assets in excess of $10 million or 500 or more shareholders. Comment on the outcome of this case.

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Definitions:

Hepatic Lobules

The functional units of the liver, hexagonal in shape, comprising a central vein surrounded by plates of liver cells (hepatocytes) involved in metabolic, detoxification, and secretory functions.

Digestive Organs

Structures involved in the process of digestion, including the stomach, intestines, liver, and pancreas.

Hepatic Lobule

Smaller division within the lobes of the liver.

Bile

A digestive fluid produced by the liver and stored in the gallbladder, aiding in the digestion and absorption of fats.