memorize

Trans Union SHs brought CA suit against BoD for NEGLIGENT DECISION-MAKING. Bd negotiated Manager LBO with Pritzker - Pritzker given a 17mil dollar lock up.

DoC Violation: Directors didn't investigate enought: short meeting; no written studies; no expert advice; ratification didn't matter because they were not informed.

Safe Harbor elaborations on 4(2):
If amount raised is under 1mil, then it will be considered private offering regardless of number of o'ees.
If amount raised in under 5mil, offer can be made up to 35 o'ees.
If amount raised is above 5mil, offer can be made to up to 35 sophisticated o'ees.

Issuer can't advertise publicly and must file a notice of the sale with SEC.

Sales by underwriters count against the total # of sales allowed in each safe harbor.

It shall be unlawful for any person by the use of any means or instrumentality of interstate commerce or of the mails to use ore mploy, in connection with the purchase or sale of any security registered on a national securities exchange, any manipulative decive.

(1)jurisdictional nexus
(2)transactional nexus
(3) materiality
(4) reliance
(5)causation
(6) scienter

Establishes three non-exclusive list of duty of confidentiality:
1. family
2. habit
3. agreed to shut up

Unlawful to make any untrue statement in connection with tender offers

When a tender offer has commenced, or is about to be commenced, it is a violation of 14(e) for a person OTHER THAN THE OFFERING PERSON to trade in the relevant securities, if that person has material, non-public information relating to the tender offer, which the person knows or has reason to know was acquired (directly or indirectly) from:
1. the offering person;
2. the target company; or
3. any officer, director, employee or other person acting on behalf of either the offering person or the target company

When a public corp discloses private info to 1 securities professional, then he must disclose the info to all professionals - even if disclosure was inadvertent.

DRAWBACKs: making corps more cautios about communication might cause lower market efficiency
reduces analyst incentives

benefits:
levels playing field
prevents biased recommendations

establishes "fraud on the market theory" to show that if there is a material misstatement, then it leads to causation in a 10b-5 violation

materialiaty = magintude and probability

O'Hagan works at firm representing Grand Met in potential tender offer for common stock of Pillsbury. O'H bought lots of shares, made lots of money.

Liable under the MISAPROPRIATION THEORY. Breached DoL to the Law Firm.

Court looks to attorney law to determine if there is a trust relationship established.

Freeze-out merger: Signal owns majority percentage of UOP and controls 4 of UOPs directors. Directors do a feasibility study, find that 14-24 per share is reasonble. Signal offers 21. UOP accepts.

Burden of Proof:
1. Plaintiff has to prove fraud, misrepresentation or misconduct; or invalid ratification - no disclosure.
2. If plaintiff so proves, Defendant has to show entire fairness of the transaction = fair price & fair dealing

Here, no disclosure, and no fair dealing.

Modified DoC analysis:
Good faith?
w/ rxble investigation?
was the response proportional to the threat?