Virginia Bankshares, Inc. v. Sandberg case brief

Virginia Bankshares, Inc. v. Sandberg case brief summary
501 U.S. 1083 (1991)

CASE 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).

CASE 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). The trial court found in favor of respondents and awarded damages.

DISCUSSION

• The appellate court affirmed holding that certain statements in the proxy solicitation were materially misleading. 
• 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.

CONCLUSION

The Court reversed the order.

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Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials