Virginia Bankshares v. Sandberg case brief summary
501 U.S. 1083
SYNOPSIS: Petitioners, banks and directors, challenged an order of the United States Court of Appeals for the Fourth Circuit, which held in favor of respondent minority shareholders in an action alleging violations of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78n(a), and 17 C.F.R. § 240.14a-9 (1990).
FACTS:
PROCEDURAL HISTORY
-The trial court found in favor of respondents and awarded damages.
501 U.S. 1083
SYNOPSIS: Petitioners, banks and directors, challenged an order of the United States Court of Appeals for the Fourth Circuit, which held in favor of respondent minority shareholders in an action alleging violations of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78n(a), and 17 C.F.R. § 240.14a-9 (1990).
FACTS:
-Respondent minority shareholders filed suit against petitioners, banks and directors, after petitioners solicited proxies for voting on a merger proposal.
-In their solicitation, petitioners urged the proposal's adoption and stated respondents would earn a "high" value and a "fair" price for their stock.
-Respondents withheld their proxies and after approval of the merger sought damages alleging violations of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78n(a), and 17 C.F.R. § 240.14a-9 (1990).
PROCEDURAL HISTORY
-The trial court found in favor of respondents and awarded damages.
-The appellate court affirmed holding that certain statements in the proxy solicitation were materially misleading.
HOLDING:
The United States Supreme Court reversed holding that the knowingly false statements might have been actionable even though conclusory in form, but that respondents failed to demonstrate the equitable basis required to extend the private action pursuant to 15 U.S.C.S. § 78n(a) to them.
RULES:
In a securities fraud case, a statement of opinion may be a false factual statement if the statement is false, disbelieved by its maker, and related to matter of fact which can be verified by objective evidence.
OUTCOME: The Court reversed the order.
HOLDING:
The United States Supreme Court reversed holding that the knowingly false statements might have been actionable even though conclusory in form, but that respondents failed to demonstrate the equitable basis required to extend the private action pursuant to 15 U.S.C.S. § 78n(a) to them.
RULES:
In a securities fraud case, a statement of opinion may be a false factual statement if the statement is false, disbelieved by its maker, and related to matter of fact which can be verified by objective evidence.
OUTCOME: The Court reversed the order.
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