Corporations and other business associations : cases and materials / Charles R.T. O'Kelley, Robert B. Thompson.
2010
KF1414 .O39 2010 (Map It)
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Title
Corporations and other business associations : cases and materials / Charles R.T. O'Kelley, Robert B. Thompson.
Published
New York, NY : Aspen Publishers, [2010]
Copyright
©2010
Call Number
KF1414 .O39 2010
Edition
Sixth edition.
ISBN
9780735586024
0735586020
0735586020
Description
xxx, 1,212 pages ; 27 cm
System Control No.
(OCoLC)553368507
Bibliography, etc. Note
Includes bibliographical references and index.
Record Appears in
Added Author
Table of Contents
Preface
xxvii
1.
Economic and Legal Aspects of the Firm
1
A.
Some Basic Concepts and Terminology
1
1.
The Classical Firm
1
a.
Introductory Note
1
b.
The Entrepreneur
1
c.
The Coasean Firm: Differentiating the Market and the Firm
2
2.
The Business Association
3
3.
The Modern Corporation and the Berle-Means Critique
4
4.
The Return of Free Market Ideology: The Firm as a Nexus of Contracts
5
5.
Separation of Ownership and Control and Agency Costs
6
6.
The New Millennium: Corporate Scandal, Financial Crises, Corporate Governance, and Government Regulation
7
B.
Organizing the Firm: Selecting a Value-Maximizing Governance Structure
8
1.
Business Planning: The Role of the Corporate Lawyer in Organizing a Firm
8
2.
The Goal of Informed Rational Choice Between Competing Investment Options
9
a.
Comparative Search for Best Investment
9
b.
Risk and Return
10
3.
Transaction Costs and Choice of Organizational Form
12
a.
Introduction
12
b.
Transaction Cost Factors
13
c.
Discrete and Relational Contracting
14
d.
Deciding to Organize as a Firm
14
4.
State-Provided Governance Structures
15
a.
Entity and Employment Law as Standard Form Contracts
15
b.
Default Versus Immutable Rules
15
c.
Tailored, Majoritarian, and Penalty Default Rules
16
5.
Nonjudicial Mechanisms that Supplement and Reinforce Private Ordering
17
a.
The Governance Role of Markets
17
b.
The Role of Trust
18
c.
The Role of Norms
19
C.
The Firm and the Law of Agency
20
1.
Introduction
20
2.
Agency Law and the Choice of Sole Proprietorship Form
20
3.
Fiduciary Limits on Agent's Right of Action
21
Community Counselling Service, Inc. v. Reilly
22
Hamburger v. Hamburger
26
Notes and Questions
28
4.
Limits on the Firm's Right to Discharge an Employee at will
29
Foley v. Interactive Data Corp
30
Notes and Questions
37
5.
Agency Law and Relations with Creditors
39
Blackburn v. Witter
40
Sennott v. Rodman & Renshaw
43
2.
Partnerships
51
A.
Introduction
51
1.
Traditional Noncorporate Business Associations
51
a.
The General Partnership
51
b.
Joint Ventures
53
c.
The Limited Partnership
54
2.
Emergence of Additional Limited Liability Entities as the Norm
54
a.
Impetus for New Forms
54
b.
The Limited Liability Partnership
55
3.
Determining the Legal Nature of the Relationship
56
Byker v. Mannes'
56
Hynansky v. Vietri
60
Notes and Questions
65
Problem 2-1
67
Problem 2-2
68
4.
Sharing Profits and Losses
68
Kovacik v. Reed
69
Shamloo v. Ladd
71
Notes and Questions
74
Problem 2-3
75
Problem 2-4
75
B.
The Partner as Fiduciary
75
1.
The Common Law Duty of Loyalty
75
Meinhard v. Salmon
76
Notes and Questions
81
Problem 2-5
82
2.
Self-Dealing
83
Vigneau v. Storch Engineers
83
3.
Fiduciary Duty and Management of the Partnership's Business and Affairs
87
Covalt v. High
87
4.
Contracting for Absolute Discretion
90
Starr v. Fordham
91
Notes and Questions
94
5.
The Duty of Care
95
Ferguson v. Williams
96
Notes and Questions
98
Problem 2-6
98
C.
Dissolution and Dissociation
98
1.
The Basic Framework
98
McCormick v. Brevig
100
Notes and Questions
106
Problem 2-7
108
Problem 2-8
108
2.
Wrongful Dissociation
109
Drashner v. Sorenson
110
McCormick v. Brevig
112
Notes and Questions
114
Problem 2-9
114
3.
Fiduciary Limits on Dissolution "At Will"
115
Page v. Page
115
Notes and Questions
118
Problem 2-10
119
4.
Fiduciary Limits on Expulsion of Unwanted Partners
119
Bohatch v. Butler & Binion
119
Problem 2-11
126
5.
Contracting to Prevent Opportunistic Withdrawal: The Fiduciary Duties Owed by Withdrawing Partners
126
Meehan v. Shaughnessy
126
Notes and Questions
134
Problem 2-12
134
D.
Partners as Agents---Allocating the Risk of Loss in Transactions with Third Parties
135
1.
A Partner's Apparent and Inherent Authority
135
P.A. Properties, Inc. v. B.S. Moss' Criterion Center Corp
136
Haymond v. Lundy
140
Note: Authority of Joint Venturers
141
Problem 2-13
142
Problem 2-14
143
2.
Partnership Authority and the Limited Liability Partnership
143
Dow v. Jones
143
3.
The Corporate Form and the Specialized Roles of Shareholders, Directors, and Officers
153
A.
The Corporate Form
153
1.
Overview
153
2.
Directors
154
3.
Officers
155
4.
Shareholders
156
Problem 3-1
158
Problem 3-2
158
B.
The Formation of the Corporation and the Governance Expectations of the Initial Participants
159
1.
Where to Incorporate: State Corporation Laws as Competing Sets of Standard Form Rules
159
Notes on the Development of American Corporate Law
160
2.
Formation: The Articles of Incorporation
162
Problem 3-3
163
3.
Determining Shares to Issue
163
Problem 3-4
164
4.
Determining Voting Rights: Using Articles and Bylaws to Change Legal Norms
166
a.
Overview of Normal Rules of Shareholder Voting for Election of Directors: Straight Voting
166
b.
Cumulative Voting
167
Problem 3-5
168
c.
Class Voting, Including Dual-Class Voting Schemes
168
Problem 3-6
169
d.
A Classified Board with Staggered Terms---Adaptability Versus Stability
169
Problem 3-7
170
5.
Looking Ahead: Shareholder Action After Electing Directors
170
a.
The Annual Meeting and Other Forums for Shareholder Action
170
Hoschett v. TSI International Software, Ltd.
172
b.
Removal of Directors and Other Midstream Private Ordering
176
Adlerstein v. Wertheimer
178
Problem 3-8
189
c.
Protecting Changes Made to the Statutory Default Rules
189
Centaur Partners, IV v. National Intergroup, Inc.
190
6.
Initial Issuance of Securities
196
a.
The Securities Act of 1933 and Its Requirement of Extensive Disclosure
196
Securities and Exchange Commission, About the SEC
197
Notes
198
b.
What Transactions are Covered?
200
Securities and Exchange Commission v. Edwards
200
c.
Exemption from Registration
204
Securities and Exchange Commission v. Ralston Purina Co.
204
Note: Exemptions
207
C.
Shareholder Investment and Governance in Publicly Held Corporations and the Impact of Federal Law
208
1.
How Publicly Held Corporations are Different
208
a.
The Market for Shares and the Efficient Market Hypothesis
208
Problem 3-9
213
b.
The Shareholder Census: The Emergence of Institutional Investors
213
c.
Proxy Voting
216
d.
Federal Regulation of Publicly Held Companies
217
Problem 3-10
220
Problem 3-11
221
2.
Shareholder Governance in the Public Corporation Setting
222
a.
Introduction
222
b.
Federal Rules Providing Shareholders Access to Persuasive Communication: Rule 14a-8
224
Lovenheim v. Iroquois Brands, Ltd.
226
Problem 3-12
230
c.
Persuasive Communication with Punch: Rule 14a-8 Proposals Linked with Use of Shareholder Authority to Elect/Remove Directors
230
Problem 3-13
232
Problem 3-14
233
d.
Using Shareholder Authority to Change the Bylaws
234
CA, Inc. v. Afscme Employees Pension Plan
235
Notes and Questions
245
Problem 3-15
246
Kistefos AS v. Trico Marine Services, Inc.
248
Notes and Questions
250
e.
Federal Rules to Enhance Shareholder Power---Shareholder Ability to Nominate Directors
250
f.
Shareholder Access to Corporate Records and Shareholder List
251
Conservative Caucus v. Chevron Corp
252
City of Westland Police & Fire Retirement System v. Axcelis Technologies, Inc.
255
Notes and Questions
261
Problem 3-16
263
4.
Fiduciary Duty, Shareholder Litigation, and the Business Judgment Rule
265
A.
Introduction to the Role of Fiduciary Duty and the Business Judgment Rule
265
1.
Overview
265
2.
Discretion to Determine General Business Policies
268
Shlensky v. Wrigley
268
3.
Discretion to Consider Interests of Non-Shareholder Constituencies
271
Dodge v. Ford Motor Co.
272
Notes and Questions
276
Problem 4-1
276
B.
The Fiduciary Duty of Loyalty
277
1.
Introduction
277
2.
The Corporate Opportunity Doctrine
277
a.
The American Law Institute and MBCA Approaches
277
Northeast Harbor Golf Club, Inc. v. Harris
277
Note: Fairness and the Doctrine of Waste
284
Notes and Questions
286
Problem 4-2
286
Problem 4-3
287
b.
The Delaware Approach
287
Broz v. Cellular Information Systems, Inc.
287
Notes and Questions
298
Problem 4-4
300
3.
Conflicting Interest Transactions
300
a.
At Common Law
300
Globe Woolen Co. v. Utica Gas & Electric Co.
301
b.
Transactions with a Controlling Shareholder or Director
305
Sinclair Oil Corp. v. Levien
305
Notes and Questions
310
c.
The Intersection of the Common Law and Conflicting Interest Statutes
311
Shapiro v. Greenfield
312
Notes and Questions
319
Problem 4-5
320
Problem 4-6
321
d.
The Special Problem of a Director's "Self-Compensation"
322
C.
The Fiduciary Duty of Care
323
1.
Policy Arguments for Limiting the Reach of the Duty of Care
323
Joy v. North
325
Notes and Questions
327
2.
Duty of Care in the Decisional Setting
328
Smith v. Van Gorkom
329
Notes and Questions
346
Problem 4-7
349
3.
Statutory Exculpation Provisions
350
Malpiede v. Townson
350
Notes and Questions
356
4.
The Intersection of the Fiduciary Duties of Care and Loyalty (Including the Duty of Good Faith)
357
a.
Introduction
357
b.
Care, Good Faith, and Directors' Oversight Responsibilities
358
In re Caremark International, Inc. Derivative Litigation
359
Notes and Questions
371
Problem 4-8
374
c.
The Role and Nature of Substantive Review
375
Brehm v. Eisner
376
d.
Directors' Duty of Good Faith Explicated
386
In re Walt Disney Company Derivative Litigation
387
Notes and Questions
392
Problem 4-9
393
e.
Officers' Oversight and Reporting Duties
393
Miller v. U.S. Foodservice, Inc.
394
Notes and Questions
397
D.
Special Aspects of Derivative and Direct Litigation
398
1.
Derivative Litigation and the Demand Requirement
398
Aronson v. Lewis
400
Notes and Questions
407
2.
Fiduciary Duty and Aronson's First Prong
411
In re the Limited, Inc. Shareholders Litigation
411
Problem 4-10
422
3.
Demand Futility Under Aronson's Second Prong or Under the Rales Test
422
Ryan v. Gifford
422
4.
Demand Futility in the Contest of Caremark Claims
428
Stone v. Ritter
428
5.
Dismissal of Derivative Litigation at the Request of an Independent Litigation Committee of the Board
432
Zapata Corp. v. Maldonado
433
Notes and Questions
437
Problem 4-11
438
E.
Indemnification and Insurance
438
Owens Corning v. National Fire Insurance Co.
440
Notes and Questions
444
Problem 4-12
445
Problem 4-13
445
Problem 4-14
446
5.
Protecting Participants' Expectations in a Closely Held Business: Corporations and LLCs
447
A.
Introduction
447
B.
Contracting as a Device to Limit the Majority's Discretion
450
1.
As to Director Decisions
450
Zion v. Kurtz
454
Blount v. Taft
459
Notes and Questions
465
Problem 5-1
466
2.
Voting Agreements as to Shareholder Decisions
467
Ramos v. Estrada
468
Notes and Questions
472
C.
Fiduciary Duty and Threat of Dissolution as a Check on Opportunistic Majority Action
473
1.
Traditional Judicial Deference to Majority's Discretion
473
Zidell v. Zidell
473
Notes and Questions
477
2.
The Partnership Analogy as a Basis for Enhancing Minority Shareholders' Rights
478
Donahue v. Rodd Electrotype Co.
479
Wilkes v. Springside Nursing Home, Inc.
484
Hetherington and Dooley, Illiquidity and Exploitation: A Proposed Statutory Solution to the Remaining Close Corporation Problem
488
Easterbrook and Fischel, Close Corporations and Agency Costs
490
Notes and Questions
491
Note: Direct Versus Derivative Suit
492
Problem 5-2
494
Nixon v. Blackwell
494
Notes and Questions
502
3.
The Modern Approach to Involuntary Dissolution
504
Thompson, the Shareholder's Cause of Action for Oppression
504
In re Kemp & Beatley, Inc.
506
Gimpel v. Bolstein
510
Notes and Questions
516
Problem 5-3
518
Problem 5-4
518
D.
Share Repurchase Agreements
519
Concord Auto Auction, Inc. v. Rustin
520
Gallagher v. Lambert
524
Pedro v. Pedro
527
Notes and Questions
531
Problem 5-5
532
6.
The Limited Liability Company
535
A.
Introduction
535
Elf Atochem North America, Inc. v. Jaffari
538
Notes and Questions
544
B.
Planning for the Limited Liability Company
545
Olson v. Halvorsen
546
Notes and Questions
555
Problem 6-1
556
C.
Fiduciary and Contractual Duties
556
1.
In General
556
Bay Center Apartments Owner, LLC v. Emery Bay PKI, LLC
558
2.
Conflicting Interest Transactions
563
Kahn v. Portnoy
563
Notes and Questions
570
D.
Judicial Dissolution
571
1.
Legal Standard
571
Fisk Ventures, LLC v. Segal
572
Notes and Questions
578
2.
Waiver
579
R&R Capital, LLC v. Buck & Doe Run Valley Farms, LLC
580
Notes and Questions
586
E.
Balancing Equitable Discretion and Respect for Private Ordering in Other Contexts
587
VGS, Inc. v. Castiel
587
7.
The Corporation as a Device to Allocate Risk
593
A.
Introduction
593
B.
Corporate Law Rules Specifying an "Equity Cushion"
594
1.
Historical Overview
594
2.
Statutory Rules Governing the Equity Cushion
596
a.
Minimum Initial Capitalization Requirements
596
b.
Quality and Valuation of Consideration Paid for Shares
597
c.
Limits on Distributions to Shareholders
597
Klang v. Smith's Food & Drug Centers, Inc.
599
Notes and Questions
604
Problem 7-1
607
Problem 7-2
608
C.
Piercing the Veil
608
1.
Introduction
608
2.
Piercing the Corporate Veil to Reach Real Persons
611
a.
Contract Cases
611
Consumer's Co-op v. Olsen
611
K.C. Roofing Center v. On Top Roofing, Inc.
618
Notes and Questions
622
Problem 7-3
625
b.
Tort Cases
625
Western Rock Co. v. Davis
626
Baatz v. Arrow Bar
628
Notes and Questions
632
Problem 7-4
634
3.
Piercing the Corporate Veil to Reach Incorporated Shareholders
634
Craig v. Lake Asbestos
635
United States v. Bestfoods
640
Notes and Questions
647
Problem 7-5
651
4.
Piercing in LLCs
651
Kaycee Land and Livestock v. Flahive
651
Notes and Questions
657
D.
Ambiguous or Legally Defective Allocation of the Risk of Loss
658
1.
Introduction
658
2.
Contracts on Behalf of Nonexistent Entities
658
a.
Introduction
658
b.
Ambiguous Attempts to Contract Around Personal Liability
659
RKO-Stanley Warner Theatres, Inc. v. Graziano
659
c.
Allocating Losses when Insiders Make No Attempt to Contract Around Personal Liability
663
Timerline Equipment Co. v. Davenport
663
Notes and Questions
667
3.
Allocating the Risk of Loss from Unauthorized Actions
669
a.
Agent's Unauthorized Actions
669
General Overseas Films, Ltd. v. Robin International, Inc.
669
Menard, Inc. v. Dage-MTI, Inc.
676
Notes and Questions
685
b.
Ultra Vires
686
Problem 7-6
688
8.
Mergers and Other "Friendly" Control Transactions
689
A.
Introduction
689
B.
The Statutory Template
691
1.
Mergers
691
Hewlett v. Hewlett-Packard Co.
692
2.
Dissenter's Rights
705
Notes and Questions
707
Problem 8-1
707
C.
Contracting Around Appraisal and Voting Rights
708
1.
Use of Alternative Transactional Forms
708
a.
Introductory Note
708
b.
Sale of Assets
709
c.
Triangular Mergers
710
d.
Compulsory Share Exchanges
710
2.
"De Facto" Mergers
711
Applestein v. United Board & Carton Corp
712
Hariton v. Arco Electronics, Inc.
717
Notes and Questions
718
Problem 8-2
720
D.
The Intersection Between the Appraisal Remedy and Fiduciary-Duty-Based Judicial Review
720
1.
Cash-Out Mergers and the Business Purpose Test
720
Coggins v. New England Patriots Football Club, Inc.
722
Notes and Questions
727
Problem 8-3
728
2.
The Weinberger Approach
728
Weinberger v. UOP, Inc.
730
Notes and Questions
742
Problem 8-4
743
E.
Appraisal and Entire Fairness Review After Weinberger
744
1.
Valuation Under Statutory Appraisal
744
Cede & Co. v. Technicolor, Inc.
745
Notes and Questions
752
Problem 8-5
753
2.
Appraisal as the Exclusive Remedy
753
a.
In Delaware
753
Glassman v. Unocal Exploration Corp
755
Notes and Questions
758
Problem 8-6
762
b.
Exclusivity in Other Jurisdictions
762
Stringer v. Car Data Systems, Inc.
763
Notes and Questions
766
Problem 8-7
769
3.
Litigating Entire Fairness---Lynch Claims
769
In re Emerging Communications, Inc. Shareholders Litigation
770
Notes and Questions
786
Problem 8-8
787
Problem 8-9
787
4.
Lynch Claims and the Siliconix Transaction: The Impact of the Common Law on Deal Structuring
788
In re Cox Communications, Inc. Shareholders Litigation
788
F.
Transfer of Control for a Premium
801
1.
Fundamental Principles
801
a.
Sale of Control Block
801
Tryon v. Smith
802
b.
Sale of Corporate Office
804
Essex Universal Corp. v. Yates
804
c.
Negligent Sale of Corporate Control
807
Harris v. Carter
807
Notes and Questions
810
Problem 8-10
811
2.
Sale of Corporate Opportunity
813
a.
Premium Received in Compensation for Sale of Corporate Asset
813
Perlman v. Feldmann
813
Notes and Questions
816
Problem 8-11
818
b.
Proper and Improper Use of Majority Power
819
Thorpe v. CERBCO, Inc.
819
Problem 8-12
826
9.
Changes in Control: Hostile Acquisitions
827
A.
The Market for Corporate Control
827
Coffee, Regulating the Market for Corporate Control: A Critical Assessment of the Tender Offer's Role in Corporate Governance
829
Black, Bidder Overpayment in Takeovers: Manager Ignorance and the Winner's Curse
833
Kraakman, Taking Discounts Seriously: The Implications of "Discounted" Share Prices as an Acquisition Motive
834
Glossary of Takeover Tactics
835
B.
Judicial Review of Tender Offer Defenses
838
1.
Traditional Review
838
Cheff v. Mathes
838
Problem 9-1
844
2.
The Enhanced Scrutiny Framework
844
a.
Introduction
844
b.
The Unocal Doctrine
845
Unocal Corp. v. Mesa Petroleum Co.
845
Notes and Questions
851
Problem 9-2
852
c.
Poison Pills
852
Moran v. Household International, Inc.
853
Notes and Questions
860
Problem 9-3
860
d.
The Revlon Rule
861
Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc.
861
Notes and Questions
867
Problem 9-4
867
e.
Refining Revlon and Unocal
868
Paramount Communications, Inc. v. Time, Inc.
868
Notes and Questions
876
Problem 9-5
878
Paramount Communications, Inc. v. QVC Network, Inc.
878
Notes and Questions
891
Problem 9-6
894
C.
Judicial Review of Voting Contest Defenses
894
1.
Judicial Limits on Inequitable Actions
894
Schnell v. Chris-Craft Industries, Inc.
894
Problem 9-7
898
2.
Enhanced Review of Good Faith Actions
899
MM Companies, Inc. v. Liquid Audio, Inc.
899
Notes and Questions
908
Problem 9-8
910
Problem 9-9
910
D.
Testing the Limits of Pre-Planned Defenses
910
Carmody v. Toll Brothers, Inc.
911
Notes and Questions
919
Problem 9-10
921
E.
Testing the Limits of "Deal Protection Devices" in Friendly Mergers
922
Omnicare, Inc. v. NCS Healthcare, Inc.
922
Problem 9-11
932
F.
State Anti-Takeover Statutes
933
Amanda Acquisition Corp. v. Universal Foods Corp
935
Notes and Questions
937
10.
Disclosure and Corporate Governance
939
A.
Introduction: Disclosure's Distinctive Role
939
B.
Mandatory Disclosure
942
In the Matter of Informix Corp
942
Notes and Questions
946
Problem 10-1
947
C.
Disclosure Related to Shareholder Voting
948
1.
Coverage of [§] 14(a)
948
2.
Rule 14a-9
949
a.
Implied Private Cause of Action
949
J.I. Case Co. v. Borak
950
Notes
954
b.
Misrepresentations or Omissions of a Material Fact
955
TSC Industries, Inc. v. Northway, Inc.
955
Virginia Bankshares, Inc. v. Sandberg
957
Notes
963
c.
Scienter
964
d.
Reliance, Causation, and Remedy
964
Mills v. Electric Auto-Lite Co.
964
Virginia Bankshares, Inc. v. Sandberg
968
Notes and Questions
975
Wilson v. Great American Industries, Inc.
975
Notes: Remedies
978
Problem 10-2
980
3.
Disclosure Required by State Law
981
In re the Topps Company Shareholders Litigation
981
Notes and Questions
995
D.
Disclosure Related to Buying and Selling
996
1.
Federal Law: Rule 10b-5
996
2.
The Reach of Rule 10b-5: Standing and "In Connection with a Purchase or Sale"
997
Birnbaum v. Newport Steel Corp
997
Notes and Questions
999
Superintendent of Insurance v. Bankers Life & Casualty Co.
1000
Notes and Questions
1003
Blue Chip Stamps v. Manor Drug Stores
1004
Notes and Questions
1008
Santa Fe Industries, Inc. v. Green
1009
Note: Case Law Since Santa Fe
1014
Problem 10-3
1016
3.
Elements of Common Law Fraud Applied to Rule 10b-5
1017
a.
Misrepresentation or Omission of a Material Fact
1017
Basic, Inc. v. Levinson
1017
Notes and Questions
1023
In re Time Warner, Inc. Securities Litigation
1024
Note: Safe Harbor for Projections
1030
b.
Defendant's Mental State---Scienter
1031
Ernst & Ernst v. Hochfelder
1031
Notes
1034
Tellabs, Inc. v. Makor Issues & Rights, Ltd.
1035
Makor Issues & Rights, Ltd. v. Tellabs, Inc.
1042
c.
Reliance and Causation
1045
Basic, Inc. v. Levinson
1046
Notes and Questions
1052
Dura Pharmaceuticals, Inc. v. Broudo
1053
Notes and Questions
1059
Problem 10-4
1061
d.
Measure of Recovery
1061
Green v. Occidental Petroleum Corp
1061
Note: Measure of Recovery Under Rule 10b-5
1067
Problem 10-5
1069
4.
State Law
1069
Malone v. Brincat
1069
Notes and Questions
1075
11.
Federal Regulation of Tender Offers
1077
A.
The Williams Act
1077
1.
Disclosure
1078
Prudent Real Estate Trust v. Johncamp Realty, Inc.
1078
Notes
1082
Securities and Exchange Commission v. Amster & Co.
1084
Notes
1088
Problem 11-1
1089
2.
Substantive Regulation
1089
Field v. Trump
1090
Notes and Questions
1095
3.
Definition of a Tender Offer
1096
Problem 11-2
1097
Problem 11-3
1098
4.
Antifraud Provisions of the Williams Act
1098
Schreiber v. Burlington Northern, Inc.
1098
Note: Duty to Disclose Corporate Mismanagement
1103
B.
Intersection of Federal Regulation and State Anti-Takeover Statutes
1104
CTS Corp. v. Dynamics Corp. of America
1105
Notes and Questions
1114
Amanda Acquisition Corp. v. Universal Foods Corp
1115
Notes and Questions
1122
12.
Insider Trading
1123
A.
The Common Law Foundation for Rule 10b-5
1123
B.
Rule 10b-5 as a Regulator of Insider Trading
1125
1.
"Classic" Insider Trading as Fraud
1126
Securities and Exchange Commission v. Texas Gulf Sulphur Co.
1126
Notes and Questions
1136
Chiarella v. United States
1139
Notes
1144
2.
Extensions of the Classic Theory
1144
a.
Tippee Liability and Constructive Insiders
1145
Dirks v. Securities and Exchange Commission
1145
Note
1152
Problem 12-1
1153
Problem 12-2
1153
Problem 12-3
1153
b.
Regulation FD
1153
Securities and Exchange Commission v. Siebel Systems, Inc.
1154
Notes and Questions
1163
Problem 12-4
1163
c.
Misappropriation and Rule 14e-3
1164
United States v. O'Hagan
1165
Notes and Questions
1175
Problem 12-5
1177
Problem 12-6
1178
Problem 12-7
1178
Problem 12-8
1178
Problem 12-9
1179
Problem 12-10
1179
Note: Enforcement
1179
C.
Regulation of Insider Trading Under [§]16 of the Securities Exchange Act of 1934
1181
1.
Enforcement
1181
Gollust v. Mendell
1182
Note: Incentive to Bring Suit
1185
2.
Computation of Recovery
1185
Problem 12-11
1186
3.
Who is an Insider?
1186
CBI Industries, Inc. v. Horton
1187
Note: Beneficial Ownership
1190
Feder v. Martin Marietta Corp
1191
Note: Deputization
1195
4.
Timing Questions: Transactions Before or After Insider Status
1195
5.
Unorthodox Transactions, Tender Offers, and the Definition of Purchase and Sale
1196
6.
Derivative Securities
1197
Table of Cases
1199
Index
1205