Margin Call: MBS Analyses - Movie Review Example

The company in the film ‘Margin Call’ had direct knowledge that their investments would be rendered worthless and that the company will go down with the lost being greater than its entire market capitalization. Through the work of Eric Dale as finished by his protégé Peter Sullivan, the company gained firsthand viable information that they will soon be in trouble. Instead of finding another way out of their conundrum, John Tuld decided to take the easier way out and instigated the MBS team to sell as much of their stocks as they can even at a lost to unknowing buyers who will later find out they have been deceived.

The fire sale that occurred prompted the buyers to grab the chance of what seemed to be a good opportunity of purchasing stocks mostly at a price lower than its current market value. In the film, the timeframe of the sale interestingly enough also determined the value of the stocks. In the first hours the price still ranges within 90 cents to a dollar but in the subsequent hours, their cost eventually plummeted where one sale by Will Emerson went down to as low as 65 cents to a dollar. These are clear indications that there was a scheme to defraud.

The victims represented by the State, through the federal government’s investigation, will win in the court of law given the circumstances prior to the fire sale and during the execution of their scheme. There were a series of overt acts committed by the executive committee and even the sales team who were informed by their boss Sam Roger during their meeting of what will go down. In fact, they have been offered an incentive if they are able to sell 93% and another incentive if the whole team reaches the same goal.

In the phone conversations Emerson had with several clients, some were asking him what they were up to aware of the buzz that they are selling massive company holdings. He kept mum about the situation and insisted “my lost is your gain” prompting them to buy immediately (Chandor, Margin Call). The company committed Fraud through inducement rendering the contract voidable with the presence of the following elements: a. False representation positive statement or conduct that misleads b. Fact an event that occurred or thing that exists c.

Materiality of substantial importance d. Knowledge of falsity and intention to deceive (called scienter) and includes (1) actual knowledge, (2) lack of belief in statement’s truthfulness, or (3) reckless indifference to its truthfulness. e. Justifiable reliance a defrauded party is reasonably influenced by the misrepresentation. Based on the facts, the elements of Fraud were present rendering MBS liable to the victims thus the agreement is voidable. There was false representation by the brokers through false statements misleading the buyers.

They defrauded by claiming that there was no catch in their sale as it was a straightforward dealing. There was deliberate intent to deceive by withholding information regarding the truth of the holdings’ worthlessness. Sullivan had in fact already found that the crash had already taken place two weeks ago and the projection merely pertains to the company’s investment losses computed according to market shift (Chandor, Margin Call). Finally, the defrauded parties relied on the company’s misrepresentation to buy the assets.

Given the facts of the case and the elements of the law defining Fraud, the victims have a chance of winning the case in court. Work Cited Margin Call. Dir. J. C. Chandor. Perf. Kevin Spacey and Paul Bettany. Lionsgate, 2011. DVD.