Biz Orgs Cases

  1. SEC v. Ralston Purina
    To be exempt from SEC filing requirments when making offers of shares to employees as compensation, the employees must have asscess to sufficient information to make an informed decision
  2. Smith v. Gross
    A soliciation is an investment K if (1) it is an investment of $ (2) regarding a common enterprise (3) where the profits come solely from teh efforts of others
  3. In re Caremark
    There is liablity to the directors for bad/stupid/erroneous decision made if the directors acted in good faith and took reasonable steps to implement a rational process (doctors)
  4. Aronson v. Lewis
    A shareholder must first make a demand on the board of directors prior to filing a derivative action unless he can show that the board is not independent/disinterested and making a demand would be futile (retiring director receiving employment K for 10 years)
  5. Cutter v. Mikalauskas
    A deriviative action may be dimissed by a disinterested board of 2+ that determines after a reasonable investigation that the suit is not in the best interests of the company (Independent Committee)
  6. Stone v. Ritter
    • You may not bring a derivative suit solely on the breach of Good Faith; you must first prove breach of loyalty or care
    • Bank had to pay 50 million in fines for not compling with filing requirements
  7. Brehm v. Eisner
    • Executive compensation will not be deemed excessive as waste where it was approved by a disinterested board unless:
    • (1) there was no reliance on an expert
    • (2) there is no reasonable belief that the advice was rendered with reasonable care
    • (3) The cost of the package was so material and available that the failure not to consider it is grossly negligent
    • (4) The decision was unconscionable
  8. Weinberger v. UOP
    • Interlocking directors owe a fiduciary duty to both corporations
    • Cash merger ($24 v. $21)
  9. Marciano v. Nakash
    • Intrinsic Fairness Test standard
    • Applies where there is a shareholder ratification requirement or if a disinterested vote is unavailable
    • Must then look at the motivations of the directors and the effect on the corporation
    • (N & M 50/50; N made loan to the company)
  10. Northeast Harbor Golf Club v. Harris
    Opportunity that comes to an officer or director must first be offered to the corp if its in the line of business, corp would be interested in the opportunity, or the opportunity was presented to the officer in his capacity
  11. Blue Chip Stamps v. Manor Drugs
    Private planitiffs must prove intent under a 10(b)(5) action
  12. Central Bank
    Only the SEC may bring an action for aiding and abetting
  13. Texas Gulf
    Directors or officers in reciept of non-public information have an affirmative duty to refrain from trading on it or disclosing it
  14. Enron
    • A private action may be brough against primary violators (read: secondary actors who help perpetuate the fraud like Ponzis)
    • Receipt of payments for services regarding the fraud is sufficient scienter
  15. Dirks v. SEC
    • A tippee who receives confidential information without deceit and does not use it for a personal benefit (AND who has no duty to the corp) is not liable under 10(b)(5)
    • Analyst/WSJ case
  16. Rauchman v. Mobil Corp
    A corp may properly refuse to include a proxy proposal regarding the election of a specific director
  17. TSC v. Northway
    Materiality for a proxy statement means that there is a substantial likelihood that reasonable shareholders would attach importance to the material when deciding how to vote
  18. Thomans Betts v. Leviton
    • Shareholders have the right to inspect the books upon the proper showing of purpose
    • The court has wide discretion to set the parameters of what a proper purpose/showing are
Card Set
Biz Orgs Cases