Under what agency law doctrine might the bank be liable for Carl’s death and what is the key factor for making this determination?

Overview

The goal of this activity is to test your understanding of agency law, its application in the workplace, and liability for employers.

Scenario

Carl, a credit officer for U Bank, evaluates and approves extensions of credit to bank clients. He has access to nonpublic information about clients’ earnings, performance, acquisitions, and business plans. U Bank caters to a very wealthy clientele and Carl frequently travels to meet potential clients for lunch dates at fancy restaurants.

Carl contracts privately with Rubin, an independent accountant, to sell securities based on bank client information. Rubin believes Carl is very smart and has a “nose for business.”

Rubin trades securities of more than 10 different companies and both men profit more than $5 million over five years.

On the way to a business meeting with a potential new bank client, Carl stops at Rubin’s house to discuss business dealings and have a few drinks. Carl leaves Rubin’s house drunk and is killed when his car strikes a tree. Carl’s family sues U Bank for Carl’s death.

Rubin, discovering the investment scheme perpetrated by Carl, sues U Bank when he is arrested for violation of the Securities Exchange Act of 1934.

Instructions

Write a one–page paper answering the questions based on the facts of the scenario. Use PowerPoint slides as a resource. 

1. Under what agency law doctrine might the bank be liable for Carl’s death and what is the key factor for making this determination?

2. Is U Bank liable to Rubin and is he guilty of violating the Securities Exchange Act of 1934? Explain.

PowerPoint Slides: