Friday, November 22, 2013

Piper v. Chris-Craft Industries, Inc. case brief

Piper v. Chris-Craft Industries, Inc. case brief summary
430 U.S. 1 (1977)


CASE SYNOPSIS
Petitioners sought review of a judgment of United States Court of Appeals for the Second Circuit in favor of respondents, holding that respondent tender offerors were entitled to bring a claim under § 14(e) of the Securities and Exchange Act of 1934, 15 U.S.C.S. § 78m, and under Securities and Exchange Commission Rule 10-b, 17 C.F.R. § 240.10b-6, for antifraud violations by successful competitors and the management of a target corporation.

CASE FACTS
Petitioners sought review of a judgment of the lower court in favor of respondents, holding that respondent tender offerors were entitled to bring a claim under § 14(e) of the Securities and Exchange Act of 1934, 15 U.S.C.S. § 78m, and under Securities and Exchange Commission Rule 10-b, 17 C.F.R. § 240.10b-6, for alleged antifraud violations by successful competitors and the management of a target corporation.

DISCUSSION

  • The Court reversed and found that respondents failed to allege a cause of action under § 14(e) and Rule 10b-6. The Court held that § 14(e) did not explicitly provide a private right of action, and based on the legislative history of the Act, no damages remedy for unsuccessful tender offerors could be implied because the sole purpose of the statute was to protect stockholders confronted with a tender offer. 
  • Thus, judicially creating a damages action in favor of respondents was unnecessary to ensure the fulfillment or purpose of the statute. 
  • In addition, respondents' claim against petitioners, based on their Rule 10b-6 violation, failed because respondents failed to allege that the price they paid for petitioners' shares was influenced by the Rule 10b-6 violation.

CONCLUSION
The Court reversed, holding that respondents failed to allege a cause of action under § 14(e) of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78m, and under Securities and Exchange Commission Rule 10-b, 17 C.F.R. § 240.10b-6.

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