“I’ve never asked you for financial advice before, but I’ve never had money to invest before! I now have $50,000 from selling the cottage, and I’d like to put it into something safe that will earn a return over the years and give me some extra income on retirement. You’re the expert, what would you suggest?”

Y thought for a while and then replied

“You could put it into government bonds, but the purchasing power of your money would just go down over the years. The smart thing would be to put it into a mutual fund, and the best one around these days is the Sure Thing Investment Group fund. They call it the ‘STING’ fund for short. It’ll return you at least 15% a year.”

“What’s a mutual fund?” asked X.

“Oh, that’s an arrangement that takes all the risk out of investing in the stock market – experts make all the decisions for you,” answered Y, smiling at his friend’s ignorance.

“How do I go about it?” asked X.

“Call Z. He’s one of my old students, and one of the best financial planners in town,” said Y, and he wrote Z’s phone number on a piece of paper for X.

X called Z as soon as he got back to his office, and told him he wanted to put $50,000 into the STING fund. Z asked no questions and offered no advice; he simply took down all the pertinent personal information about his new client and suggested he send him a cheque for $50,000. X mailed the cheque that afternoon. The stock market fell dramatically in the fall of 2008, having a dramatic impact on the value of X’s investment: it fell to $10,000, and is still hovering around that figure. All the experts agree it has no prospect of ever being worth much more.

my question is, can he sue the second guy for not giving him advice? duty of care? I’m sure he can sue the first guy, but can he sue Z?

HELP!

Can a company President be fired for taking company funds? Can the taking of those funds “cash her out” so to speak, for company shares?

We have a C Corp, 50% equally shared. The two shareholders held the positions of President/Treasurer (let’s call her Shareholder A) and Vice President/Secretary (let’s call him Shareholder B). Neither took an active role in the company. Instead, a contracted employee ran the day to day affairs for the past five years, and that employee was a main signer on the bank account, and that employee also signed all checks, paid all bills, etc., managed day to day affairs, and received pay. Let’s call him Mr. C.

Shareholder B has since disappeared from the scene. He was not active in the company, and, since the last annual report, he moved, and no one can reach him. His phone has changed, email reports back as dead address, etc.

Shareholder A, about a month ago, was added to the company bank account as a signer. A few weeks later, she began withdrawing amounts of money as
counter withdrawals. Mr. C caught on when seeing the series of withdrawals, and could not reach Shareholder A. The total amount to date is nearly $3,500. She did not answer any of his calls. He tried texting to her, asking what she was doing and asking her to stop, since, as a small company, her taking of funds was meaning that payroll for staff and paying of bills could not be met.

There was never an agreement or even request by her to receive pay.

It could not be reported as fraud because she is a signer on the account. To protect what was left of the money, Mr. C took out the rest of the funds and put them in another account. However, the company has a Reserve Line and Shareholder A is now drawing from that, still making counter withdrawals.

The only contact Shareholder A has made, by text, to Mr. C, is that “you will hear from my lawyer.”

Shareholder B can not be reached to fire Shareholder A, and we don’t even know if that is possible, since it is a 50/50 split of shares.

Questions:

1. Can anyone step into Shareholder B’s position as Vice President, let’s say Mr. C, for example, who has been running day to day operations for the past five years, since Shareholder B can not be found?

2. Can Shareholder A be fired as President for what she is doing? Is this not considered misuse of company funds??

3. If no one can step in to Shareholder B’s position, what do we do?? How can action be taken to stop this woman from bankrupting the company?

4. In the meantime, other people have invested, but shares were never re-organized, so there are actually more shareholders, based on funds invested for the purpose of being shareholders. Can those shareholders act as a group to fire this lady?

5. In terms of Shareholder A’s stock ownership — she invested $5,000 originally — considering she already took $3500, can we issue her a check for $1500 and consider her to be bought out?

Please help. I think she has a drug problem or something, but we will lose our entire business if this keeps up, because we’re a small shop.

Trying to dissolve and re-organize is not what we want, partly because we have state certifications that we can not easily re-apply for, without risk of being out of business for a prolonged period of time, plus we finally have been in business long enough to qualify for financing and credit, and we don’t want to start over.

We just want this lady gone. We’re pretty sure we can fire her, and remove her as a signer on the bank account, and then close that account and open a new one, to stop the theft of funds, but in the absence of Shareholder B, we’re not sure, since he and her are the ones listed on the original documents. Plus, we want her gone as a shareholder, and we’re not sure how to accomplish that, unless, as suggested, we can consider the money she took as buy out money and pay her the rest and call it paid.

Please help. Sorry this was long-winded.