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SEC v. Texas Gulf Sulphur Co.

United States Court of Appeals for the Second Circuit

May 11, 1971, Argued ; June 10, 1971, Decided

No. 914, Docket No. 35143


 [*1304]  WATERMAN, Circuit Judge:

The within appeals bring before us for the second time the well-known combinations of situations that arose out of Texas Gulf Sulphur's (hereinafter TGS) discovery of rich ore deposits near Timmins, Ontario, and the accompanying stock transactions by the appellants. A detailed description is set forth in our prior opinion, 401 F.2d 833 (2 Cir. 1968) (in banc). 1 In that decision we reversed the district court with reference to its findings, contained in its opinion, 258 F. Supp. 262 (SDNY 1966), as to several of the defendants who had been found below not to have violated Section 10(b) of the Securities Exchange Act of 1934 (hereinafter the Act), 15 U.S.C. § 78j(b), and Rule 10b-5, 17 CFR 240.10b-5, promulgated thereunder, and we remanded the case for a hearing on the appropriate remedies to be applied 2 [**3]  and for the resolution of one undecided question of liability. That hearing has been held, and varying sanctions have been applied. The judgment order entered below (1) enjoined defendants Clayton and [**2]  Crawford from future violations of Rule 10b-5, (2) denied injunctions against TGS, and defendants Fogarty, Mollison, Stephens, Darke, Huntington, Holyk, and Kline although each was found to have violated 10b-5, (3) required Darke to pay to TGS the profits which he and his tippees made on TGS stock prior to April 17, 1964, (4) required Holyk, Huntington, and Clayton to pay to TGS the profits which each of them made on the TGS stock prior to April 17, 1964, 3 and (5) required Kline's stock option to be canceled. In deciding the issues presented on this appeal, we have grouped the issues for easier discussion.

A. TGS -- The April 12 press release.

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446 F.2d 1301 *; 1971 U.S. App. LEXIS 9669 **; Fed. Sec. L. Rep. (CCH) P93,072

SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, v. TEXAS GULF SULPHUR COMPANY, a Texas Corporation, et al., Defendants-Appellants


district court, stock, injunction, profits, restitution, press release, misleading, violations, court of appeals, cancellation, opinion testimony, oral argument, stock option, transactions, investor, appropriate remedy, prior opinion, equity power, contends, inside, urges

Evidence, Testimony, Lay Witnesses, Ultimate Issue, General Overview, Constitutional Law, Freedom of Speech, Commercial Speech, Bill of Rights, Fundamental Freedoms, Free Press, Scope, Business & Corporate Compliance, Regulators, US Securities & Exchange Commission, Injunctions, Securities Law, Civil Liability Considerations, Remedies, Equitable Relief, Preservation of Remedies & Rights, Administrative Proceedings, Securities Act Actions, Civil Liability, Civil Procedure, Judgments, Relief From Judgments, Postoffering & Secondary Distributions, Scope of Provisions, Limitations on Remedies, Penalties & Unlawful Representations, Business & Corporate Law, Directors & Officers, Management Duties & Liabilities, Blue Sky Laws, Offers & Sales, Governments, Courts, Authority to Adjudicate, Appeals, Rehearings in Appellate Courts