This question is about events in the SF novel Owner's Share by Nathan Lowell. The novel is set in the year 2373. Obviously there is no way to be sure what the law will be at that date, so I am asking what the law for a similar situation would be in the year 2022, in New York State, although I would also be interested in the law in other jurisdictions. [This question includes spoilers for the earlier books in the series.]
IN this novel the main character, Captain Ishmael Wang, has a chance to purchase a used spaceship designed for both freight and passengers at the bargain price of 35 million credits (about 1/3 of the market price). Not having that much money of his own, Ishmael hires a financial advisor, William Simpson. Simpson sets up a company with nine shares of stock, each with a face value of ten million credits. He arranges for four venture capital investors to buy one share each at face value, which would give Ishmael the purchase price plus additional start up funds. In return the stock will pay 5% dividends annually, starting after five years. But at the last moment, one investor backs out of the deal. Simpson arranges a 90-day loan of 8 million, at 6%, backed by one share of the company.
As the end of the 90-day period approaches, the company ios doing well, but has not earned the required eight million credits. Here is the relevant conversation between Ishmael Wang and William Simpson (from chapter 65 of Oner's Share)
“So, how can I help you today, Captain?” Mr. Simpson asked with a small smile and a sidelong glance.
“I’ve come about the note, sir. It’s due in a couple of days and the ship hasn’t earned enough in so short a time. I wondered if you’d found a buyer for the stock so that we might avoid default.”
He reached over and patted my forearm with one bony hand. “Here’s what will happen on the twenty-sixth, my boy.” He laced his fingers together across his chest and continued. “Assuming you haven’t the liquid assets needed to repay the loan, you will default. Larks, Simpson, and Greene will take ownership of the single share of stock that you’ve assigned as collateral. Once that happens we’ll sell it to an investor, removing ourselves from ownership, and leaving you to deal with your board of directors.”
“You already have an investor, sir?” “We do, my boy. We do.”
“Then why not sell them a share of unencumbered stock, and let me pay off the loan without incurring the default?”
He turned his head toward me. “If we did that, we’d forego the opportunity to earn a profit of two million credits.” He shook his head, and turned back to gaze out through the armorglass. “We’ve invested a great deal of time and money in getting you started up, Captain. You’ll walk away with an unencumbered company, and the opportunity to succeed or fail on your own without long-term liabilities. Please don’t deny us a modest profit on the transaction.”
It seems to me that the Simpson character, a paid financial advisor who knows that Wang is relying on his advice, is in the position of a fiduciary (or would be under current law) and would be ethically and legally required to but his client's interest first, and not take the two million additional profit, on top of his fees and the 6% interest on the loan. Is that correct?
[I will add that I recommend this series, which consists of the novels Quarter Share, Half Share, Full Share, Double Share, Captain's Share, and Owner's Share. Buty I would not advise starting with the sixth of these.]