MP is the face of the business Most likely the ones to be confronted with these opportunities MP is given opportunity to make relationships by FP (financial partner) so they have to report back with opportunity offers that they have received is a sentiment that the FP does not have nearly as high a FD Can this duty be weighed? FD cannot be weighed However, you can carve out things in advance that will not be considered a breach of a FD Partnership needs trust and future opportunities may not be certain Meinhard duty Factors Nexus People and relationships involved Use of partnership property Use of logos and indicia of the partnership Remember, MP is the face of the partnership…indicia If in doubt, you should probably find a breach of FD The duty is really high Did you offer the opportunity? Did you provide notice? PARTNERSHIP DISSOLUTION Even partners who are locked in an irreconcilable dispute usually manage to agree to some plan which enables one or all of them to exit gracefully, because whatever settlement the feuding individuals can work out is likely to prove more economical than court-ordered dissolution, a procedure which typically results in the partnership property being disposed of for considerably less then its actual value. this is what Fairfax was talking about when she said she had to force people to think about what they would do in partnership dissolution situations just as they are getting ready to do business. Partnership Dissolution 3 part process (1) formal dissolution (2) winding up of partnership affairs (3) termination of the partnerships Triggering dissolution Act of one of the partners Express will of the partners By virtue of agreement Term of a partner Bankruptcy of a partner
Courts will say that we will judge the timing of your action on the order, rather than the execution What about if someone had a standing order to purchase a stock at regular intervals? Judge it at the time of the order. No violation here because there was no material, non-public info at the time of the order. What if she has the ability to stop it? Does she have an obligation to do so? Yes. The best protection is to put into the standing order a provision disabling your ability to stop it. Or, some companies put a halt on trading at certain times before or after a public statement Standing orders are probably better What is the problem with the stock options? If the board issues stock options in and around the time a major event is to occur? Aside: stock options The right to purchase shares at a particular price If the stock jumps, you can receive a major windfall The board routinely gives out stock options What are you to say to the board if you have inside info? Conflicting duties FD/confidentiality v. insider trading If the board goes through, you have to keep in mind that you would be on the hook for insider trading The Court doesn’t really wrestle with this You could let them issue it and cancel it out Go halfway and say it isn’t a good idea but you cannot say why No real good answer Most people would probably just disclose Not just the insiders…what about the trades made by people you told? You are in fact liable for the info you gave them, even though they themselves are not liable Damages? The profit you make from buying or selling with insider info – the profit you have made without the insider info Should insider trading be a violation of securities laws? The SEC originally discussed insider trading as an equity issue Why can’t the response be…but I am the one that created the information Isn’t it unfair for those laboring to dig out the minerals to be deprived of reaping profits? The response on the other side is you reward them with bonuses, etc. rather than some kind of back door trading The other argument on the other side is it is never the laborers’ information to begin with, it is the SHs’ and public’s information