From our private database of 37,500+ case briefs...
Shivangi v. Dean Witter
United States Court of Appeals for the Fifth Circuit
825 F.2d 885 (1987)
Dean Witter (Dean) (defendant) was a broker-dealer that served as a market maker for Keldon Oil (Keldon), whose stock was traded over the counter. At Dean’s suggestion, Dr. Sampat S. Shivangi and Dr. Udaya S. Shivangi (plaintiffs) purchased 400 Keldon shares through Dean. Dean typically fulfilled customer orders for Keldon from shares Dean acquired for its own account or already held in inventory (the principal model). That was the case with the Shivangis, who bought Keldon shares directly from Dean rather than trading with a third party with Dean’s assistance. Dean did not tell the Shivangis (or customers generally) that its account executives received higher commissions for principal-model transactions. According to a Dean witness, this disparity was meant to restore compensation to its level before a Securities and Exchange Commission (SEC) rule change incidentally reduced compensation for over-the-counter trades. Industry custom at the relevant time was not to disclose compensation to customers; indeed, neither the SEC nor any court had ruled that such disclosure was required. Dean did, however, disclose all information it was required to disclose by the SEC. There was no evidence that Dean suggested the Keldon purchase for reasons relating to its compensation system or that the compensation system affected the price the Shivangis paid for the stock. Keldon’s stock price declined soon after the Shivangis’ purchase, causing them to suffer a significant loss. The Shivangis brought a putative class-action suit against Dean and others, alleging that Dean’s nondisclosure of its account-executive compensation system violated § 10(b) of the Securities Exchange Act of 1934, SEC Rule 10b-5, and state law. At the bench trial, Dean moved to dismiss the Shivangis’ claims at the close of their case, arguing they failed to adduce evidence that Dean acted with scienter (i.e., an intent to deceive). The Shivangis appealed.
Rule of Law
Holding and Reasoning (Higginbotham, J.)
What to do next…
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 631,000 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
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 631,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 37,500 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.