Wilko v. Swan


DECIDED BY: Warren Court (1953-1954)

ARGUED: Oct 21, 1953
DECIDED: Dec 07, 1953

Facts of the case

The securities market is defined as the aggregate of public relations regarding the issue and circulation of securities. The practice of considering disputes related to the application of securities market rules shows that the most common are disputes related to circulation (turnover) of shares. Securities transactions are related to risk-related investment transactions. Moreover, transactions with securities are a complex risk, because here there is a manifestation of the whole complex of various financial risks. When managing the risk of securities transactions, it is necessary to take into account that it is influenced by various factors such as systematic, selective, temporary, liquidity, credit, inflation, interest rate, foreign exchange, etc. This case brief is one of the precedents the basis of which constitute the risky financial operation.

As part of this case study, the plaintiff Wilko bought a certain amount of securities because his exchange broker Swan assured him of the profitability of this transaction. However, the alleged merger of the two companies did not happen and as a result, the operation was unprofitable. The plaintiff filed a complaint alleging that he was the victim of securities fraud. The defendant, in turn, argued that, according to the contract between him and his client, he is entitled to stay of proceedings. The plaintiff also held the view that such a departure from the trial was unlawful. In the end, the case was reviewed by the Supreme Court, and the decision was taken in favor of the plaintiff in terms of evading arbitration, but not on the part of awarding compensation.