Movie Boiler Room Legal Perspective Essay Example | Topics and Well Written Essays - 500 words

Movie Boiler Room Legal Perspective - Essay Example him shares on Farrow Tech offering information that the company has a revolutionary new drug that will soon be approved by the Food and Drug Administration. On the promise of high returns, he lures the buyer by initially selling a minimum amount on the basis of testing the waters. Then, when the stocks have had a minimal percentage gain, Harry would fall at ease with Seth as his broker. However, when the stocks dropped, Harry wanted to pull out his money but Seth reels him back in by declaring he has information that the drug will actually soon be approved. He pushes it further claiming there is another product to hit the market and eventually was successful in attaining a $50,000 dollar investment from Harry. The latter had consequently invested his family’s entire savings (Younger, Boiler Room). These actions constitute fraud in the inducement contrary to law. The elements of this kind of fraud are: â€Å"1. a false representation; 2. of a fact; 3. that is material and; 4. made with knowledge of its falsity and the intention to deceive (scienter); and 5. which representation is justifiably relied on† (Mann and Roberts 211). More specifically, it is fraud through false representations. Since ordinarily, nondisclosure in sales does not constitute an actionable offense, the misrepresentation must have the following requisites: â€Å"(1) a person fails to disclose a fact known to him; (2) he knows that the disclosure of that fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract; and (3) nondisclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing† (Mann and Roberts 211-212). There is material false representation in the movie since all the information Seth told Harry were not based on any factual assertion but were just fabrications made by JT Marlin . Based on these representations, people bought the shares he offered. In fact, despite