362 F.3d 854 (2004)
In attempting a hostile takeover, the company made a cash tender offer of the target's common stock that was extended only to those shareholders who were holders of record as of the record date or who could obtain a valid proxy. The company sought advice about this condition from the SEC, but was told that the SEC did not issue no-action letters on this rule. When the company proceeded, the SEC advised that this condition violated the rule. The company withdrew the condition.
On review, the court vacated the SEC's order, finding that it was arbitrary and capricious. The SEC failed to explain how there was a sufficient risk of a future violation. There was no basis to doubt the company's assurance that it would not violate the rule in the future. Further, there was no basis for treating this violation as serious. The plain language of the rule did not indicate that it applied to this condition. There was no formal SEC precedent or official interpretive guideline on this point. Additionally, the SEC failed to establish any serious harm to the shareholders or to the marketplace from this condition. There was only a single violation of the rule that was immediately corrected.
The court vacated the SEC's cease-and-desist order.
Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials