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Wellman v. Dickinson - 475 F. Supp. 783

Rule:

To limit standing only to those to whom an offer was actually made is a clear misreading of the Williams Act (Act), 15 U.S.C.S. §§ 78m et seq. The underlying purposes are to give protection to shareholders in shifts of corporate control, to require prior disclosure if the shift occurs through a tender offer, and to require a post acquisition filing under § 13(d) of the Act, 15 U.S.C.S. § 78m(d), filing if the shift occurs otherwise. All shareholders of the target are within the class the Act was designed to protect. 

Facts:

In the liability phase of consolidated actions, defendants sought dismissal of complaints, arising from defendant corporation's takeover bid, that alleged violations of the Securities Exchange Act of 1934, 15 U.S.C.S. §§ 78j et seq., the Investment Company Act of 1940, 15 U.S.C.S. §§ 80a et seq., and related rules and regulations. Defendant corporation executed a takeover bid/tender offer, and the Securities and Exchange Commission (Commission) alleged violations of the Securities Exchange Act of 1934, 15 U.S.C.S. §§ 78j et seq., the Investment Company Act of 1940, 15 U.S.C.S. §§ 80a et seq., and various rules and regulations promulgated thereunder. Plaintiffs in other consolidated actions also alleged violations of fiduciary obligations, the New York Stock Exchange Rule 390 (Rule), and the New Jersey Corporation Takeover Bid Disclosure Law (Disclosure Law), 49 N.J. Stat. Ann. § 5-9(b). 

Issue:

Were there violations of statutory filing requirements arising from the takeover bid?

Answer:

Yes

Conclusion:

Thedistrict court found defendants liable for violations of various statutory filing requirements, and in substantial compliance with others; the court denied plaintiffs a private right of action under the Rule and abstained from application of the Disclosure Law because the relevant issues had not been fully addressed. No private right of action can be implied under Rule 390 of the NYSE, so no relief will be obtained here for violation of that rule. There was a violation of Section 14(d) of the Williams Act for making a tender offer without the required pre-acquisition filing and others violated Section 13(d) by failing to file the necessary statement indicating the formation of a group involved in the transfer of corporate control.

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