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Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Livingston
United States Court of Appeals for the Ninth Circuit
566 F.2d 1119 (1978)
William G. Livingston (defendant) was an employee at Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch) (plaintiff). From 1951 to 1972, Livingston held the title of account executive. In January 1972, Merrill Lynch began an account-executive recognition program for account executives to reward outstanding sales records. Although Livingston and 47 other account executives received the title of vice president, they held the same duties as they did prior to the change in title. Livingston never attended and was never invited or permitted to attend executive meetings or meetings of the board of directors. Livingston did not acquire any executive or policy-making duties, because those duties were delegated to approximately 350 executive vice presidents at Merrill Lynch. Livingston did obtain growth-production rankings, which was information not generally available to the public. However, Livingston’s supervisor did not provide him any information that would be useful for stock-trading purposes. Livingston participated in short-swing transactions in Merrill Lynch securities, resulting in profits. Merrill Lynch brought suit against Livingston for violation of § 16(b) of the Securities Exchange Act of 1934. The district court entered a judgment against Livingston, ordering him to pay $14,836.37 on profit made on short-swing transactions. The district court held that § 16(b) imposed strict liability on any person who held the title of officer and who had executive duties and access to information not generally available to the public. Livingston appealed.
Rule of Law
Holding and Reasoning (Hufstedler, J.)
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