Deutschman v. Beneficial Corp. case brief summary
841 F.2d 502 (3d Cir. 1989)
CASE FACTS
Plaintiff stock purchaser brought suit against defendants, corporation, chairman and chief executive officer, and chief financial officer based on violations of the Securities Exchange Act of 1934, 15 U.S.C.S. §§ 78j(b), 78t(a). The district court held that the purchaser of a call option lacked standing to sue under the Securities Exchange Act of 1934 and was not an appropriate class representative for purchasers of defendants' stock.
DISCUSSION
CONCLUSION
The court reversed the decision of the district court which held that plaintiff stock purchaser did not have standing to sue under the Securities Exchange Act. The court held that plaintiff had standing as a purchaser of an option contract to seek damages based on the affirmative misrepresentations of defendants, corporation, chairman and chief executive officer, and chief financial officer.
Recommended Supplements for Corporations and Business Associations Law
841 F.2d 502 (3d Cir. 1989)
CASE SYNOPSIS
Plaintiff stock purchaser sought review
of the decision of the United States District Court for the District
of Delaware, which dismissed the amended class action complaint
against defendants, corporation, chairman and chief executive
officer, and chief financial officer pursuant to Fed. R. Civ. P.
12(b)(6), based on violations of the Securities Exchange Act of
1934, 15 U.S.C.S. §§ 78j(b), 78t(a), and negligent
misrepresentation.CASE FACTS
Plaintiff stock purchaser brought suit against defendants, corporation, chairman and chief executive officer, and chief financial officer based on violations of the Securities Exchange Act of 1934, 15 U.S.C.S. §§ 78j(b), 78t(a). The district court held that the purchaser of a call option lacked standing to sue under the Securities Exchange Act of 1934 and was not an appropriate class representative for purchasers of defendants' stock.
DISCUSSION
- Upon review, the court held that plaintiff's complaint appeared to satisfy every requirement of a § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78j(b) damage action which dealt with affirmative misrepresentations which affected the market price of a security.
- The court was not willing to construe § 10(b) as inapplicable to option contracts on the basis of speculation about the relationship between option contracts, market liquidity, and capital formation.
- The court held that plaintiff had standing as a purchaser of an option contract to seek damages under § 10(b) for the affirmative misrepresentation defendants allegedly made.
- The court reversed the dismissal of plaintiff's § 10(b) and pendent law claim.
CONCLUSION
The court reversed the decision of the district court which held that plaintiff stock purchaser did not have standing to sue under the Securities Exchange Act. The court held that plaintiff had standing as a purchaser of an option contract to seek damages based on the affirmative misrepresentations of defendants, corporation, chairman and chief executive officer, and chief financial officer.
Recommended Supplements for Corporations and Business Associations Law
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