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In the Matter of Cady, Roberts & Co.

United States Securities and Exchange Commission
40 S.E.C. 907 (1961)


Facts

Robert Gintel (defendant) was a broker of Cady, Roberts & Co. (registrant) (defendant). J. Cheever Cowdin was a representative of the registrant and a director of Curtiss-Wright Corporation (Curtiss-Wright). Curtiss-Wright announced a new engine development plan. Gintel bought Curtiss-Wright stock for his customers. Later, the Curtiss-Wright directors, including Cowdin, met to discuss a quarterly dividend and finally approved a dividend cut. Due to some technical problems, the dividend news was not communicated to the New York Stock Exchange (Exchange) immediately. Before it became public, Gintel learned about the dividend cut through a phone call from Cowdin. Gintel placed two sales of Curtiss-Wright stock to protect his clients. The Exchange suspended trading in Curtiss-Wright after the dividend news came out. The Securities and Exchange Commission (SEC) launched this proceeding against the defendants, alleging fraud. The defendants argued that they did not expressly make false representations or otherwise manipulate the market. Gintel was fined by the Exchange. The defendants offered a settlement under which Gintel would be suspended from the Exchange for 20 days.

Rule of Law

Issue

Holding and Reasoning (Cray)

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