Securities and Exchange Commission v. Edwards. Law Essay

Securities and Exchange Commission V. Edwards
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Securities and Exchange Commission V. Edwards
Case facts
Charles Edward is the principal subject in several businesses relevant to this case. He is the defendant in this case and was a company owner at ETS payphones. He ran several roles, such as the head of the board of management, the chief operating officer, and the solitary shareholder. The company sold phones to the public at an assured rate of return. The plaintiff, Securities and Exchange Commission, place a civic act against the Edwards. The plaintiff claimed that Edwards violated two federal laws; Registration requirements and antifraud provisions. In an attempt to meet their promises to the purchasers, ETS was required to use the money acquired from their new investors to clear their outstanding compulsions rather than having it sum up to returns (Karmel, 2005). After facing several financial problems, they ran bankrupt and hence forced to file bankruptcy in 2000. Following their declaration of bankruptcy, the Security Exchange Commission claimed that Edwards’ with his firm violated Acts 1933 and 1934 regarding the selling of Security However, Edward opposed the Security Exchange Commissions with claims that his fixed rates on profits should not be considered as an investment as its capital did not appreciate. Also, neither his revenue nor the returns were conditional to its purchasers or other purchasers.
The parties involved and their positions
In this case, two parties involved in this case are Charles Edwards, the defendant and Securities, and exchange Commissions- the plaintiff. The defendant, who operated a Payphones company, has charges brought against his firm from the SEC for violating the antifraud provisions and as well, registration requirements under both the Securities Act of 1993 and the Exchange Act of 1934. The defendant was also accused of violating the Rule of 10b-5. The defendant claims that the agreement that his company provides to its buyers is not an investment as there is no capital appreciation (Edwards et al., 2007). The return is unconditional upon other buyers. He further argues that the buyers are obligated to receive profits conferring to the terms and conditions of the agreement. The buyers are indebted to receive a return conferring to the terms and conditions written out in the terms and conditions section.
Case’s Procedural History
The Security Exchange Commissions sued Charles Edwards, and by extension, ETS. An initial hearing in which the Federal District Court decided freezing all Edwards’s properties followed it. The Court further established that ETS sales and the leaseback agreement was an outlay project in the sense of, and thus was subject to Federal Securities Rule. The defendant filed an appeal against the first ruling, and it was taken up to the 11th Circuit Court of Appeal. The 11th Court established that the Federal District Court has insufficient Jurisdictional powers to make the judgment (Edwards, 1993). Further, the 11th Circuit Court of Appeal challenged that the SEC did not offer satisfactory evidence against ETS on whether or not the sales of the Payphones established an investment agre...