An investor deposited money in the company for a guaranteed yield. The company did not inform the investor that regulatory changes were expected in the market and when these went into effect, it stopped its activity. Moreover, the company did not separate the money from the deposit into its own money and its shareholder, who was also its manager. After the cessation of its activity, he also used the deposit funds to pay wages, including himself and his family.
The Court held that the company and its management must personally return the full investment money. In the course of negotiations, any information relevant to the investor must be disclosed, and the disclosure of expected regulatory changes and their possible effect on the continuation of trading activity, constitutes a lack of good faith in the negotiations and creates liability for damage caused by a breach of good faith in negotiations. In addition, customers' deposits should be deposited in a separate account and used to pay the company's expenses and withdrawing money to the shareholder constitutes a mixture between the company's assets and the owners' assets and constitutes grounds for raising the veil of corporation. When the company manager uses money for current needs and pays "salaries" to him and his family while skipping over the separate personality, he is not entitled to hide behind the separate personality of the companies.