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SEC v. First City Financial Corp.

United States Court of Appeals for the District of Columbia Circuit

September 19, 1989, Argued ; December 1, 1989

No. 88-5232

Opinion

 [*1217]  SILBERMAN, Circuit Judge

] Section 13(d) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(d), requires any person who has directly or indirectly obtained the beneficial ownership of more than 5 percent of any registered equity security to disclose within 10 days certain information to the issuer, the exchanges on which the security trades, and to the [**2]  Securities and Exchange Commission ("SEC"). 1 The SEC charged appellants, First City Financial Corporation, Ltd. ("First City") and Marc Belzberg, with deliberately evading section 13(d) and its accompanying regulations in their attempted hostile takeover of Ashland Oil Company ("Ashland") by filing the required disclosure statement after the 10 day period. The district court concluded that appellants had violated the statute; it then enjoined them from further violations of section 13(d) and ordered them to disgorge all profits derived from the violation. See SEC v. First City Financial Corp., et al. 688 F. Supp. 705 (D.D.C. 1988). We think that the district court's findings were not clearly erroneous and that the injunction and disgorgement orders were lawful and appropriate remedies for appellants' violations. We therefore affirm.

 [**3]  I.

The SEC's case is based on its contention that on March 4, 1986 Marc Belzberg, a vice-president of First City, telephoned Alan ("Ace") Greenberg, the Chief Executive Officer of Bear Stearns, a large Wall Street brokerage firm, and asked Greenberg to buy substantial shares of Ashland for First City's account. Appellants claim that Greenberg "misunderstood" Belzberg: the latter intended only to recommend that Bear Stearns buy Ashland for its own account.

 [*1218]  First City is a diversified Canadian corporation founded and controlled by the Belzberg family and engaged in, among other things, investing in the publicly-traded securities of United States corporations. Samuel Belzberg, Marc's father, is the Chairman and Chief Executive Officer of the company. Samuel Belzberg and his two brothers own at least 70 percent of the stock of First City. Marc Belzberg managed the company's fifteen-person New York City subsidiary. The New York office apparently evaluated potential investments for the parent First City.

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890 F.2d 1215 *; 1989 U.S. App. LEXIS 19773 **; 281 U.S. App. D.C. 410; Fed. Sec. L. Rep. (CCH) P94,801; 29 Fed. R. Evid. Serv. (Callaghan) 1055

SECURITIES AND EXCHANGE COMMISSION v. FIRST CITY FINANCIAL CORPORATION, LTD., et al., APPELLANTS

Prior History:  [**1]   Appeal from the United States District Court for the District of Columbia, Civil Action No. 86-02240.

Disposition:  Affirmed.

CORE TERMS

stock, district court, disgorgement, shares, injunction, appellants', percent, buy, profits, takeover, disclosure, trading, conversation, chronology, purchases, district judge, tender offer, accumulated, violations, acquiring, put-call, factors, clearly erroneous, deliberately, bias, lack of remorse, securities law, per share, arbitrageurs, deposition

Mergers & Acquisitions Law, Takeovers & Tender Offers, General Overview, Securities Law, Recordkeeping & Reporting Requirements, Issuers of Securities, Duties & Liabilities of Shareholders, Civil Liability Considerations, Remedies, Equitable Relief, Scope of Provisions, Definitions, Civil Procedure, Appeals, Standards of Review, Clearly Erroneous Review, De Novo Review, Remands, Evidence, Judicial Intervention in Trials, Comments by Judges, Governments, Courts, Judges, Contracts Law, Contract Formation, Admissibility, Circumstantial & Direct Evidence, Exceptions, Residual Exception, Necessity, Hearsay, Trustworthiness, Criminal Law & Procedure, Fraud Against the Government, False Statements, Relevance, Preservation of Relevant Evidence, Exclusion & Preservation by Prosecutors, Criminal Offenses, Fraud, Harmless & Invited Errors, Harmless Error Rule, Procedural Matters, Rulings on Evidence, Judgments, Relief From Judgments, Motions for New Trials, Abuse of Discretion, Injunctions, Permanent Injunctions, Postoffering & Secondary Distributions, Subject Matter Jurisdiction, Federal Jurisdiction, Burdens of Proof, Ultimate Burden of Persuasion, Securities Exchange Act of 1934 Actions, Insider Trading, Disgorgement of Profits, Allocation, Penalties