2. The SEC never appealed this case. Do you believe that the SEC prosecuted Switzer because of his high profile?
3. Did Switzer’s partners have a legal and/or ethical duty to inquire about the source of Switzer’s information?
Switzer inadvertently overheard Platt, an executive at TIC discuss highly confidential information about one of TIC’s subsidiaries, Phoenix, in a casual conversation with his wife while in the bleachers at a track meet. The next day Switzer convinced several investors to form a partnership for the purposes of purchasing large amounts of Phoenix stock, which neither Switzer nor his partners ever heard of. Ultimately, Switzer and his partners earned a substantial profit from the purchase and sale of the stock and after an investigation, the SEC filed a complaint alleging that Switzer was a tippee in violation of rule 10(b)(5) of the ’34 Act.