Securities and Exchange Commission v. Lorin

877 F. Supp. 192 (1995)

From our private database of 45,900+ case briefs, written and edited by humans—never with AI.

Securities and Exchange Commission v. Lorin

United States District Court for the Southern District of New York
877 F. Supp. 192 (1995)

Facts

The Securities and Exchange Commission (SEC) (plaintiff) alleged that Capital Shares, Inc.; Lawrence Caito (its sole shareholder and control person) (collectively, Capital); and Rosario Russell Ruggerio (defendants) and others violated the Securities Act of 1933 and the Securities Exchange Act of 1934 by manipulating the market for the stock of the Haas Securities Corporation (Haas). At trial, the SEC presented evidence that (1) Capital bought large quantities of Haas stock with the understanding that Haas would buy much of the stock back in order to create the appearance that Haas’s stock was more widely traded than it really was and (2) Haas in fact did buy back a significant portion of Capital’s purchases of Haas stock. Specifically, Capital purchased $44 million in Haas stock in 1987 and sold $20 million of that stock back to Haas. Moreover, Capital and Haas regularly engaged in end-of-day recapping calls, which the SEC’s expert witness opined occurred with unusual frequency and were consistent with the SEC’s view that Capital was confirming that Haas would buy the stock back. The SEC also presented evidence that Ruggiero (who was a broker at Haas and before that at another brokerage) manipulated the market for Haas stock by, for example, (1) advising clients to buy Haas stock despite his recognition that the stock was overvalued, (2) opening a brokerage account in his wife’s name to buy Haas stock, and (3) buying Haas stock on behalf of his clients without their authorization. Capital responded that it acted as a lawful, high-risk market-maker and that it saw an opportunity to make money by buying what it professed to believe was undervalued Haas stock. However, Capital did not explain why it purchased such a large amount of a risky stock or why it immediately sold most of the stock back to Haas.

Rule of Law

Issue

Holding and Reasoning (Baer, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 736,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials
  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 736,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 45,900 briefs, keyed to 984 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 736,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 45,900 briefs - keyed to 984 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership