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Rule 10b-5 and disclosure of merger negotiations
In granting the defendants' motions for summary judgment and class decertification in the case of Levie v. Sears Roebuck & Co et al, the district court in the Northern District of Illinois confirmed that Rule 10b-5 does not require parties to disclose the existence of merger negotiations, e...
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Published in: | Insights (Clifton, N.J.) N.J.), 2010-04, Vol.24 (4), p.22 |
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Main Authors: | , |
Format: | Article |
Language: | English |
Subjects: | |
Online Access: | Get full text |
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Summary: | In granting the defendants' motions for summary judgment and class decertification in the case of Levie v. Sears Roebuck & Co et al, the district court in the Northern District of Illinois confirmed that Rule 10b-5 does not require parties to disclose the existence of merger negotiations, even if material, absent an affirmative duty to disclose. Plaintiffs alleged that Sears and Lacy (the Sears defendants) violated Rule 10b-5 by their failure to disclose the existence of the merger negotiations. In their motion to dismiss, the Sears defendants relied on Seventh Circuit precedent that merger negotiations do not become 'material' until the price and structure of the deal are agreed upon. Most fact patterns confronting M&A practitioners will not be quite as clear cut as the facts in Levie, and as a result, the Levie decision may be of limited value as a guide to materiality analysis. |
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ISSN: | 0894-3524 |