What constitutes a reasonable time depends on the circumstances of the dissemination. Roche, a mining stock specialist, added that mines with significantly lower percentages of copper and with no zinc or silver, as here, were profitably operated. What Just Happened to SEC Insider Trading Disgorgement? - LinkedIn The attempt to acquire the adjoining properties at reasonable prices (ultimately $52,500) and the strictures on secrecy are customary in the mining industry, especially when dealing with land of a highly uncertain value. Our new book, A History of Securities Law in the Supreme Court, explores how the Supreme Court has made (and remade) securities law.It covers the history of the federal securities laws from their inception during the Great Depression, relying on the justices' conference notes, internal memoranda, and correspondence to shed light on how they came to their decisions and drafted their opinions. Tex. 416 (SDNY 1955), for policy reasons which seem perfectly consistent with the broad Congressional design "* * * to insure the maintenance of fair and honest markets in * * * [securities] transactions." Texas Gulf Sulphur Co. was a landmark of the jurisprudence of insider trading in the United States. The Texas Gulf Sulphur decision began what has become a fifty-year project of developing U.S. insider trading regulation through judicial lawmaking. If corporations were literally to follow its implications, every press release would have to have the same SEC clearance as a prospectus. Even to the majority in their self-assumed fact-finding role, the "mine" was only a more than marginal "possibility." Gen. This Day In Market History: Texas Gulf Sulphur Company's Mineral Strike The Commission can suspend trading for successive periods of 10 days in any security which it feels is being affected by misleading press releases ( 15 (c) (5), 19(a) (4), 15 U.S.C. Insider trading is one of the most violent crimes on the faith of fair dealing in a capital market. 258 F.Supp. The trial court did not find it necessary to decide whether TGS exercised such diligence and has not yet attempted to resolve this issue. Texas Gulf Sulphur represented the first time a federal court held that insider trading violated federal securities law and remained the leading case on insider trading for a decade. 95 (S.D.N.Y. No reason appears why outside investors, perhaps better acquainted with speculative modes of investment and with, in many cases, perhaps more capital at their disposal for intelligent speculation, would have been less influenced, and would not have been similarly motivated to invest if they had known what the insider investors knew about the K-55-1 discovery. LAW OF CORPORATE MANAGEMENT AND FINANCE LGST Legal Studies & Business cases. denied, Bard v. Dasho, 389 U.S. 977, 88 S.Ct. Texas Gulf Sulphur Co. Finally, Coates, as we have already indicated in fn. Whether predicated on traditional fiduciary concepts, see, e. g., Hotchkiss v. Fisher, 136 Kan. 530, 16 P.2d 531 (Kan.1932), or on the "special facts" doctrine, see, e. g., Strong v. Repide, 213 U.S. 419, 29 S.Ct. I agree with Judge Friendly, however, that we should provide guidance to the District Courts with respect to pending private claims for damages based upon Rule 10(b) (5) arising out of the transactions now before us. In all of the above cases the defendants, unlike the defendant here, were clearly participants in a securities transaction and were guilty of or responsible for deceptive activities of which the securities transaction was an integral part. a statement which under the circumstances and then known facts would have been the height of recklessness. These officers, who engaged in securities transactions on the basis of material, nonpublic information, 1 2 3 (p. 389) 4 5 6 bonds or stock options) by the individuals with potential to access to non-public information about company. The trial court after hearing and seeing the witnesses has resolved these factual issues and in my opinion its decision should be sustained. 252 F.Supp. The essence of the SEC's case is that Timmins was a once-in-a-lifetime affair; the company's motive in issuing the release was laudable; and the defect was solely a pardonable one of execution. Faberge, Inc., 45 S.E.C. Although several other witnesses objected to the breadth of the proposed prohibition that Corcoran was supporting, the section as enacted did not in any way limit the broad scope of the "in connection with" phrase. While the alleged fraudulent acts were committed before plaintiff sold his stock (he had not at the time of suit), he was about to be forced to sell his part of a single fraudulent scheme.). It had reached a price of 26 by March 31, after the land acquisition program had been completed and drilling had been resumed, and continued to ascend to 30 1/8 by the close of trading on April 10, at which time the drilling progress up to then was evaluated for the April 12th press release. Further contrast it with a hypothetical November 1963 press release implicitly suggested by the majority "TGS as a result of drilling on its property in Canada has knowledge of the more than marginal possibility of a mine of magnitude over an extensive region of remarkably rich mineralization." Plaintiff, the Securities and Exchange Commission, brought this suit against Defendants, Texas Gulf Sulphur Co., et al., after Defendants bought shares . Of necessity the April 12 press release had to be issued on the basis of the drilling results through 7:00 p. m., April 10, and it seems clear that the trial court determined that it would not be reasonable to charge TGS with knowledge of later information. 56-7 (1944); 8 SEC Ann.Rep. No. Counsel, David Ferber, Sol., Roger S. Foster, Sp. Contrary to the belief of the trial court that Kline had no duty to disclose his knowledge of the Kidd project before accepting the stock option offered him, we believe that he, a vice president, who had become the general counsel of TGS in January 1964, but who had been secretary of the corporation since January 1961, and was present in that capacity when the options were granted, and who was in charge of the mechanics of issuance and acceptance of the options, was a member of top management and under a duty before accepting his option to disclose any material information he may have possessed, and, as he did not disclose such information to the Option Committee we direct rescission of the option he received. See 258 F.Supp. 80, 17 L.Ed.2d 70 (1966); see also SEC v. R. A. Holman & Co., 366 F.2d 456, 457-458 (2 Cir. At 3:00 P.M. on April 12, 1964, evidently believing it desirable to comment upon the rumors concerning the Timmins project, TGS issued the press release quoted in pertinent part in the text at page 845, supra. Daily progress reports of the drilling of this hole K-55-3 and of all subsequently drilled holes were sent to defendants Stephens and Fogarty (President and Executive Vice President of TGS) by Holyk and Mollison. Cf. denied, 394 U.S. 976 (1969). 754 (1944). Securities Law in the Sixties: The Supreme Court, the Second Circuit at 282 n. 10. However, at the time of Texas Gulf Sulphur , it was not yet clear that insider trading was punishable as a crime. See Baranow v. Gibralter Factors Corp., 366 F.2d 584, 587-589 (2 Cir. An insider is not, of course, always foreclosed from investing in his own company merely because he may be more familiar with company operations than are outside investors. Gediman v. Anheuser Busch, Inc., 299 F.2d 537, 545 (2 Cir. 670 (S.D.N.Y. 1968); SEC v. Texas Gulf Sulphur Co., 258 F. Supp. This assumption raises the question of what is material and who is to make such a determination. Graded Quiz Unit 5 - Opening the Gates to Higher Education - Studocu A offerings under the 1933 Act): Item 8(A) (b), 1 CCH Fed.Sec.L.Rep. Visual estimates revealed an average content of 0.82% copper and 4.2% zinc over a 525-foot section. This insider trading activity, which surely constitutes highly pertinent evidence and the only truly objective evidence of the materiality of the K-55-1 discovery, was apparently disregarded by the court below in favor of the testimony of defendants' expert witnesses, all of whom "agreed that one drill core does not establish an ore body, much less a mine," 258 F.Supp. 1960), and cases there cited, it is likewise true that an isolated violation, especially in the absence of bad faith, does not require such relief. Thus any statement issued by a publicly listed company is made "in connection" with the purchase or sale of securities. Moreover, it should be possible for officers to communicate with directors, of all people, without fearing a breach of confidence. The court below found: "There is no evidence that TGS derived any direct benefit from the issuance of the press release or that any of the defendants who participated in its preparation used it to their personal advantage." The avoidance of liability for misrepresentation in the event that the Timmins project failed, a highly unlikely event as of April 12 or April 13, did not forbid the accurate and truthful divulgence of detailed results which need not, of course, have been accompanied by conclusory assertions of success. Although I see no reason why we could not affirm nevertheless, I am content to leave it for him to consider whether, although he has power to issue an injunction, there is equity in this portion of the bill. Disgorgement in Insider Trading Cases: FY2005-FY2015 - SMU In my opinion such a broad interpretation of the statute is unwarranted as a matter of statutory construction and unwise as a matter of policy. To be sure, SEC official publicity accompanying the promulgation of the Rule emphasized the insider trading aspects of the Rule, particularly the prohibition against purchases by insiders, but this was emphasized because "the previously existing rules against fraud in the purchase of securities applied only to brokers and dealers," 8 SEC Ann.Rep. For example, the company had spent some $7,000,000 to purchase an underwater dome off the coast of Texas and an additional $1,000,000 to drill 21 holes before concluding that there was not enough sulphur in the dome to be of commercial interest.

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