Muriel B. Seymour and David Seymour, Plaintiffs-Appellees-Cross-Appellants v. Summa Vista Cinema, Inc., Defendants-Appellants-Cross-Appellees

In any event, Alexander is liable as a controlling person if (1) Alexander had actual power or influence over Shestak, and (2) Alexander was a culpable participant in the alleged illegal activity.Buhlerv. Audio Leasing Corp.,807 F.2d 833, 835 (9th Cir. 1987). Participation may be proven indirectly by showing that Alexander failed to establish a reasonable system of supervision and control.Id.at 836. In the broker-dealer context presented here, Alexander had actual power over Shestak as his employer and a corresponding duty to supervise him.See Kersh v. General Council,804 F.2d 546, 550 (9th Cir. 1986);Zweig v. Hearst Corp.,521 F.2d 1129, 1134-35 (9th Cir.),cert. denied,423 U.S. 1025[96 S.Ct. 469, 46 L.Ed.2d 399] (1975). Alexander does not seriously dispute this, but claims instead there is no evidence to support the allegation that its supervision and training were inadequate. The evidence, however, clearly supports this claim.[3]

[3] For example, Alexander did not hold regular sales meetings of its account executives or sales people. Shestak did not receive an employee manual or receive any training from Alexander. Moreover, Shestak testified he was unaware of any Alexander policy regarding controls on outside sales and the evidence suggests Alexander did not require written notification of such sales.