JI Case v. Borak (1964)
§ The issue that is always of concern with misrepresentation is whether or not the fact is material. The fact must be material.
§ In 14(a) there is nothing in the statute that says who can sue if something goes wrong – specifically it does state whether or not a private action may be brought. So if it does not specify it – can the court still allow it?
§ Once there has been a merger it is almost impossible to put back the way it was – so the only real remedy is damages.
§ So the court in order to interpret the statutes looks at the purpose.
§ You need to private parties to enforce the law.
§ Certiorari was granted to consider whether Securities Exchange Act provision authorizes federal cause of action for rescission or damages to corporate stockholder with respect to consummated merger which was authorized pursuant to use of proxy statement alleged to contain false and misleading statements in violation of the Act. Securities Exchange Act of 1934, §§ 14(a)
§ The purpose of Securities Exchange Act provision making it unlawful to solicit proxy or consent authorization in violation of commission rule is to prevent management or others from obtaining authorization for corporate action by means of deceptive or inadequate disclosure of proxy solicitation, stemming from congressional belief that fair corporate suffrage is important right that should attach to every equity security bought on a public exchange. Securities Exchange Act of 1934, § 14(a)
§ It is for federal courts to adjust their remedies so as to grant necessary relief where federally secured rights are invaded, and when federal statute provides for general right to sue for such invasion, federal courts may use any available remedy to make good wrong done.
§ Today’s court would never have made this decision.
o If an investor does not feel they are meaningful protected they will stop investing, so it is critical to have the utmost integrity in the market.