Securities and Exchange Commission v. Switzer

The Securities and Exchange Commission (SEC) (plaintiff) brought an action against Barry Switzer (defendant) and others alleging violations of federal securities laws. Switzer was the head football coach at the University of Oklahoma and involved in various ventures in the oil and gas industry. Switzer went to a track meet to watch his son compete. George and Linda Platt, whose son was also competing, were there as well. George was the chairman and chief executive officer of Texas International Company (TIC), which was engaged in exploration and development of oil and natural-gas properties. George was also a director of Phoenix Resources Company (Phoenix), in which TIC owned a controlling interest. Switzer and George recognized and greeted each other, but neither knew the other would be there. Switzer visited with the Platts a few times during the meet, discussing their sons, the oil and gas business, and their personal investments. The two men did not discuss Phoenix, and George did not make any stock recommendations to Switzer. At some point, Switzer lay down on a bleacher a few rows behind the Platts to sunbathe while waiting for his son’s next event. The Platts were discussing childcare arrangements and their schedules for the following week. George mentioned to Linda that a liquidation of Phoenix might occur the following Thursday. Switzer overheard this but did not know the information was confidential, and the Platts did not know Switzer heard it. After the meet, Switzer looked up the price of Phoenix, decided to buy stock, and shared the information with a friend, attributing it to “someone who should know.” Switzer and his friend approached another friend, and together they purchased a substantial number of shares. A few days later, a merger was announced between Phoenix and a TIC subsidiary. George did not know until months later that Switzer had traded on information he overheard at the track meet. By that time, the SEC was investigating Phoenix. A bench trial was held.