a short essay 1-2 pages in length

See attachment Can you answer the questions on each attachment in a short essay 1-2 pages in length

Barry ESCOTT
v.
BARCHRIS CONSTRUCTION CORP.
283 F.Supp. 643.
United States District Court, Southern District of New York.
March 29, 1968.
LEGAL & HISTORICAL SIGNIFICANCE
• This decision is the most complete and authoritative word on the scope of liability under Section 11 of the Securities Act of 1933.
• The officers of BarChris Construction Corporation loaned money to the firm and also arranged for corporate bank loans. To raise still more money, BarChris sold bonds (certificates that evidence corporate debt). When BarChris did not repay the bonds, Barry Escott and others who had bought them filed a suit in federal dis-trict court. They alleged that the bonds’ registration statement (a document that must be filed with the Securities and Exchange Commission in regard to se-curities—which include stocks and bonds—disclosing information of interest to potential investors) contained material false statements and omissions. The defen-dants included BarChris’s officers and directors. Most of the misstatements related to loans that BarChris had taken out, loans that BarChris had made, and defaults on both. The defendants filed motions to dismiss the suit.
• The most significant issue for the court to address was the standard of care to apply to the defendants.
CASE EXCERPTS
McLEAN, District Judge.
* * * *
Section 11(b) of the [Securities] Act [of 1933] provides that:
“ * * * no person, other than the issuer, shall be liable * * * who shall sus-tain the burden of proof [the duty of proving a fact in dispute]—
* * * *
(3) that (A) as regards any part of the registration statement not purporting to be made on the authority of an expert * * * he had, after reasonable investiga-tion, reasonable ground to believe and did believe, at the time such part of the reg-istration statement became effective, that the statements therein were true and
18 HANDBOOK OF LANDMARK CASES AND STATUTES, REVISED EDITION
that there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; * * * and (C) as regards any part of the registration statement purporting to be made on the authority of an expert (other than himself) * * * he had no reasonable ground to believe and did not believe, at the time such part of the registration statement became effective, that the statements therein were untrue or that there was an omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading * * * .”
Section 11(c) defines “reasonable investigation” as follows:
“In determining, for the purpose of paragraph (3) of subsection (b) of this section, what constitutes reasonable investigation and reasonable ground for belief, the standard of reasonableness shall be that required of a prudent man in the management of his own property.”
Every defendant * * * has pleaded these affirmative defenses [a response that does not deny the facts but attacks the legal right to bring the suit]. Each claims that (1) as to the part of the registration statement purporting to be made on the authority of an expert * * * , he had no reasonable ground to believe and did not believe that there were any untrue statements or material omissions, and (2) as to the other parts of the regis-tration statement, he made a reasonable investigation, as a result of which he had rea-sonable ground to believe and did believe that the registration statement was true and that no material fact was omitted. As to each defendant, the question is whether he has sustained the burden of proving these defenses. Surprising enough, there is little or no judicial authority on this question. No decisions directly in point under Section 11 have been found.
* * * *
I turn now to the question of whether defendants have proved their due diligence [a reasonable investigation on which a party bases his or her belief about the truth of a statement] defenses. The position of each defendant will be separately considered.
RUSSO
Russo was, to all intents and purposes, the chief executive officer of BarChris. He was a member of the executive committee. He was familiar with all aspects of the business. * * * He acted on BarChris’s behalf in making * * * financing agreements * * * . He talked with customers about their delinquencies [failures to make payments when due].
* * * He knew the status of [BarChris’s projects]. * * *
It was Russo who arranged for the temporary increase in BarChris’s cash in banks * * * , a transaction which borders on the fraudulent. He was thoroughly aware of BarChris’s stringent financial condition * * * . He had personally advanced large sums to BarChris of which $175,000 remained unpaid * * * .
ESCOTT v. BARCHRIS CONSTRUCTION CORP. 19
In short, Russo knew all the relevant facts. He could not have believed that there were no untrue statements or material omissions in the prospectus. Russo has no due diligence defenses.
VITOLO AND PUGLIESE
They were the founders of the business who stuck with it to the end. Vitolo was president and Pugliese was vice president. Despite their titles, their field of responsibil-ity in the administration of BarChris’s affairs during the period in question seems to have been less all embracing than Russo’s. Pugliese in particular appears to have limited his activities to supervising the actual construction work.
Vitolo and Pugliese are each men of limited education. It is not hard to believe that for them the prospectus was difficult reading, if indeed they read it at all.
But whether it was or not is irrelevant. The liability of a director who signs a registration statement does not depend upon whether or not he read it or, if he did, whether or not he understood what he was reading. [Emphasis added.]
And in any case, Vitolo and Pugliese were not as naive as they claim to be. They were members of BarChris’s executive committee. At meetings of that committee BarChris’s affairs were discussed at length. They must have known what was going on. Certainly they knew of the inadequacy of cash * * * . They knew of their own large ad-vances to the company which remained unpaid. They knew that they had agreed not to deposit their checks until the financing proceeds were received. They knew and intended that part of the proceeds were to be used to pay their own loans.
All in all, the position of Vitolo and Pugliese is not significantly different, for pre-sent purposes, from Russo’s. They could not have believed that the registration state-ment was wholly true and that no material facts had been omitted. And in any case, there is nothing to show that they made any investigation of anything which they may not have known about or understood. They have not proved their due diligence defenses.
[The court discussed the other defendants’ circumstances separately, applying the highest standard of care to the insiders who, like Russo, Vitolo, and Pugliese, were principal officers that are required to sign a registration statement. The court also took into consideration each signer’s expertise, such as a legal or accounting background.]
* * * *
Defendants’ motions to dismiss this action * * * are denied.
FOR CRITICAL ANALYSIS
1. Should the court have allowed the officers of the corporation to avoid liability on the ground that they relied on their attorneys and accountants to draft the statement properly?
2. Is it fair to hold someone liable on the basis of a document that they sign without reading? Why or why not?
20 HANDBOOK OF LANDMARK CASES AND STATUTES, REVISED EDITION
CASE GLOSSARY
Affirmative defense A response that does not deny the facts of a plaintiff’s claim but attacks the plaintiff’s legal right to bring the suit.
Bonds Certificates that evidence corporate debt.
Burden of proof The duty of proving a fact in dispute.
Due diligence A reasonable investigation on which a party bases his or her belief about the truth of a statement.
Registration statement A document that must be filed with the Securities and Ex-change Commission in regard to securities, disclosing information of interest to potential investors.

The Small Business Regulatory Enforcement Fairness Act of 1996
INTRODUCTION
The power of federal administrative agencies expanded considerably in the middle third of the twentieth century. In exercising this power, the agencies issued an increasing number of regulations to cover every aspect of business. Many businesspersons were frustated with the ever-burgeoning canon of regulation. It took more time and money to do what the regulations required, and in some instances, compliance with one could mean violation of another. Frustration with this situation, and other aspects of government, exploded in the ballot box, resulting in the election of a large number of new congresspersons in the mid-1990s. With the support of the new electors, Congress gave itself the power to freeze the enforcement of most federal regulations before they take effect. Under the Small Business Regulatory Enforcement Fairness Act of 1996,1 all federal agencies must submit final rules to Congress before the rules become effective. If, within sixty days, Congress passes a joint resolution of disapproval concerning a rule, its enforcement is frozen while it is reviewed by congressional committees. The act also helps to ensure that federal agencies consider ways to reduce the economic impact of new regulations on small businesses. For example, the act provided for a National Enforcement Ombudsman to receive comments from small businesses about their dealings with federal agencies. Based on these comments, Regional Small Business Fairness Boards rate the agencies and publicize their findings.
EXCERPTS
Section 801. Congressional review
(a)
(1)
(A) Before a rule can take effect, the Federal agency promulgating such rule shall submit to each House of the Congress * * * a report containing—
(i) a copy of the rule;
(ii) a concise general statement relating to the rule, including whether it is a major rule; and
(iii) the proposed effective date of the rule.
* * * *
(C) Upon receipt of a report submitted under subparagraph (A), each House shall provide copies of the report to the chairman and ranking member of each standing committee with jurisdiction under the rules of the House of
15 U.S.C. Sections 801–808.; 15 U.S.C. Section 657
THE SMALL BUSINESS REGULATORY ENFORCEMENT FAIRNESS ACT OF 1996 149
Representatives or the Senate to report a bill to amend the provision of law under which the rule is issued.
* * * *
(3) A major rule relating to a report submitted under paragraph (1) shall take effect on the latest of—
(A) the later of the date occurring 60 days after the date on which—
(i) the Congress receives the report submitted under paragraph (1); or
(ii) the rule is published in the Federal Register, if so published;
(B) if the Congress passes a joint resolution of disapproval * * * relating to the rule, and the President signs a veto of such resolution, the earlier date—
(i) on which either House of Congress votes and fails to override the veto of the President; or
(ii) occurring 30 session days after the date on which the Congress received the veto and objections of the President; or
(C) the date the rule would have otherwise taken effect, if not for this section (unless a joint resolution of disapproval * * * is enacted).
* * * *
(b)
(1) A rule shall not take effect (or continue), if the Congress enacts a joint resolution of disapproval * * * .
* * * *
Section 657. Oversight of regulatory enforcement
* * * *
(b) SBA Enforcement Ombudsman
* * * *
(2) The Ombudsman shall—
(A) work with each agency with regulatory authority over small businesses to ensure that small business concerns that receive or are subject to an audit, on-site inspection, compliance assistance effort, or other enforcement related communication or contact by agency personnel are provided with a means to comment on the enforcement activity conducted by such personnel;
(B) establish means to receive comments from small business concerns regarding actions by agency employees conducting compliance or enforcement activities with respect to the small business concern * * * on a confidential basis * * * ;
(C) based on substantiated comments received from small business concerns and the [Regional Small Business Regulatory Fairness] Boards, annually report to Congress and affected agencies evaluating the enforcement activities of agency personnel including a rating of the responsiveness to small business of the various regional and program offices of each agency; [and]
(D) coordinate and report annually on the activities, findings and recommendations of the [Regional Small Business Regulatory Fairness]
150 HANDBOOK OF LANDMARK CASES AND STATUTES, REVISED EDITION
Boards to the Administrator [of the Small Business Adminstration] and to the heads of affected agencies [.]
* * * *
(c) Regional Small Business Regulatory Fairness Boards
* * * *
(2) Each Board * * * shall—
(A) meet at least annually to advise the Ombudsman on matters of concern to small businesses relating to the enforcement activities of agencies;
(B) report to the Ombudsman on substantiated instances of excessive enforcement actions of agencies against small business concerns including any findings or recommendations of the Board as to agency enforcement policy or practice; and
(C) prior to publication, provide comment on the annual report of the Ombudsman prepared under subsection (b) of this section.
(3) Each Board shall consist of five members, who are owners, operators, or officers of small business concerns * * * . Not more than three of the Board members shall be of the same political party. No member shall be an officer or employee of the Federal Government, in either the executive branch or the Congress.