Fed. Sec. L. Rep. P 96,310 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. William G. Livingston

dissenting:

I would hold that the findings of the district court, being based upon inferences drawn from the undisputed facts and the documentary evidence, are not clearly erroneous and that the judgment of the district court should be affirmed. Because the taint of short swing trading by a vice-president causes subjective damage to the issuer by eroding shareholder confidence in the integrity of management, the penalties of Section 16(b) should here be applied. Champion Home Builders Co. v. Jeffress, 490 F.2d 611, 619 (CA6 1974), cert. denied 416 U.S. 986 , 94 S.Ct. 2390 , 40 L.Ed.2d 763 . We have before us a purchase and sale by a vice-president within the six month period. Here, the district court found that Livingston had not rebutted the presumption that he had the potential for access to inside information and, at least, that he had the opportunity to gain access to such information. Makofsky v. Ultra Dynamics Corp., 383 F.Supp. 631, 640 (S.D.N.Y.1974).

Manifestly, the statute raises a presumption that a person who holds the title of vice-president has the executive duties and the opportunities for confidential information that the title implies. I agree that this…

Merrill Lynch, Pierce, Fenner & Smith, Inc. (“Merrill Lynch”) obtained judgment against its employée Livingston requiring him to pay Merrill Lynch $14,836.37 which was the profit that he made on short-swing transactions in the securities of his employer in alleged violation of Section 16(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 78p (1971)). We reverse because Livingston was not an officer with access to inside information within the purview of Section 16(b) of the Securities Exchange Act of 1934.

From 1951 to 1972, Livingston was employed by Merrill Lynch as a securities salesman with the title of “Account Executive.” In January, 1972, Merrill Lynch began an “Account Executive Recognition Program” for its career Account Executives to reward outstanding sales records. As part of the program, Merrill Lynch awarded Livingston and 47 other Account Executives the title “Vice President.” Livingston had exactly the same duties after he was awarded the title as he did before the recognition. Livingston never attended, nor was he invited or permitted to attend, meetings of the Board of Directors or the Executive Committee. He acquired no executive or policy making duties.…

566 F.2d 1119 Fed. Sec. L. Rep. P 96,310 MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., Plaintiff-Appellee, v. William G. LIVINGSTON, Defendant-Appellant. No. 75-3779. United States Court of Appeals, Ninth Circuit. Jan. 4, 1978. G. Douglas Kranwinkle (argued), of Munger, Tolles & Rickershauser, Los Angeles, Cal., for defendant-appellant. Joel Mark (argued), of MacDonald, Halsted & Laybourne, Los Angeles, Cal., for plaintiff-appellee. Before HUFSTEDLER and KILKENNY, Circuit Judges, and GRANT, * District Judge. HUFSTEDLER, Circuit Judge: 1 Merrill Lynch, Pierce, Fenner & Smith, Inc. ("Merrill Lynch") obtained judgment against its employee Livingston requiring him to pay Merrill Lynch $14,836.37 which was the profit that he made on short-swing transactions in the securities of his employer in alleged violation of Section 16(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 78p (1971)). We reverse because Livingston was not an officer with access to inside information within the purview of Section 16(b) of the Securities Exchange Act of 1934. 2 From 1951 to 1972, Livingston was employed by Merrill Lynch as a securities salesman with the title of "Account…