International Trade Law Case Study: Hunt et al. v. Alliance Analysis

This case study examines the legal intricacies of Hunt et al. v. Alliance North American Government Income Trust, Inc. The plaintiffs, investors in the trust, alleged misleading statements in the prospectus regarding hedging techniques to mitigate currency fluctuation risks. The case navigates the complexities of prospectus liability, the adequacy of cautionary language, and the application of hedging strategies in international trade. The court's decision regarding the use of hedging techniques and other claims, along with the importance of unambiguous clauses in registration statements and risk cover are analyzed. The case highlights the importance of clear communication in prospectuses, the scope of risk disclosure, and the legal ramifications of investment decisions in the context of international trade and finance. The case provides a valuable insight into the legal challenges and responsibilities in the global financial market.

LEGAL ASPECTS OF
INTERNATIONAL TRADE AND
ENTERPRISE

Case:
Hunt et al. v. Alliance North American
Government Income Trust, Inc

INTRODUCTION
Case:
Hunt et al. v. Alliance North American
Government Income Trust, Inc
Plaintiffs: Robert b. Hunt, IRA; Paul James, IRA
and Paul James
Defendants: North American Government
Income Trust, Inc.

BACKGROUND OF THE CASE
 Share of the trust were purchased by
plaintiffs for a period of from 27th
March 1992 to 23rd December 1994.
 Investment in open ended mutual funds
of government securities of Canada,
Mexico and US.
 Shares were sold pursuant to registration
statement and prospectus issued by the
Trust.

BACKGROUND OF THE CASE
 Statement in prospectus: trust managers
will use hedging technique for avoiding
adverse effect of fluctuation in rates of
foreign currency.
 By end of 1994, Marxian Peso was
devalued and there was a sudden fall in
value of mutual fund.

BRIEF OF THE CASE
 Consolidated complain was filed in
district court of New york against the
Trust.
 Allegation was made that statements
presented in prospectus are misleading.
 Application was rejected by district court
with all averments and it was stated that a
motion for leave to re plead could be
entertained.

BRIEF OF THE CASE
 Appeal was made in United States
Court of Appeal to pass the motion and
making amendments in the compliant.
 Contention was made by plaintiffs that
decision of district court is not correct
about dismissing their case.

THE ARGUMENTS
Plaintiffs:
Hedging techniques:
Funds are exposed to currency fluctuation but
are covered under hedging technique.
 Hedging might not cover all the risk.
It was not mentioned anywhere that hedging
was not available to use for covering of risk.

THE ARGUMENTS
Proposed Amended Complaint
Hedging devise is available and that Fund
would make an attempt to protect the
investment against currency risk.
Cautionary language in prospectus does nor
necessarily disclosed all liabilities as it had
warned investors about different constituencies
other than the claim of plaintiffs.

THE ARGUMENTS
Other claims:
It was contented that, plaintiffs must be
allowed to amend their complained to allege
that annual report and advertising material of
defendant was also misleading.
violation of section 13(a) (3) of Investment
Company Act for deviated the prudent
investment risk without taking vote from the
shareholders.

THE ARGUMENTS
Defendants:
languages used in prospectus is cautionary.
Statement made clears warning about risk
related with investment.
Investor must posses ability to forecast interest
rate and inherent risk.
The case must be judged with decision made in
case of “Olkey, 98F.3d at 2.
 Prospectus must be read in full.

THE TRIBUNAL DECISION
 For use of hedging technique it was
held that district courts decision was
not upheld and plaintiffs were granted
relief.
 For other claims the decision of
district court was affirmed.

THE IMPORTANCE OF CASE IN
INTERNATIONAL LAW
 Presenting Unambiguous clauses in registration
statements and prospectus.
 Risk cover: Type, level and extent,
 Formulation of legislation

REFERENCES
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Scholars Publishing.
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pp.1335-1468.
Crites, R. W., Middlebrooks, E. J. and Bastian, R. K.,
2014. Natural wastewater treatment systems. CRC Press.
Read, D. W. and Bailey, W. A., 2015. A primer on teaching the law
of wills, probate, and basic estate planning documents to business
law students. Southern Journal of Business and Ethics, 7, pp.11-
35.
Saxunova, D., 2017, August. GREEN BONDS AS A
COMPONENT OF THE SUSTAINABLE FINANCING AND
THEIR PERFORMANCE. In 3rd 2017 Academy of Business and
Emerging Markets (ABEM) Conference (p. 6).