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CASE ENTRY

Straits Fin. LLC v. Ten Sleep Cattle Co.

Ten Sleep, Wyo. cattle rancher tells his investment broker to close an account. Instead, the broker does some unauthorized trading and loses $2 mil. The broker obfuscates, then resigns from his firm; the firm seeks to recover the $2 mil from the rancher, first from the rancher’s other account at the firm (which has a positive balance less than $2 mil) and then sues for the rest. District court: The rancher got defrauded. But he didn’t pay sufficiently close attention to his account statements, so he gets reduced damages. Seventh Circuit: He gets full damages. Fraud victims are expected to take reasonable steps only after they become aware of the fraud; they are not required to take precautions that, with the benefit of hindsight, would have avoided the fraud or ended it sooner.


Tags: 2018, Fraud, Investment Fraud, Seventh Circuit

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