Basic Incorporated, et al. v. Max L. Levinson et al. (485 U.S. 224)
U.S. Supreme Court · decided March 7, 1988 · Supreme Court Database (Spaeth)
- Citation
- 485 U.S. 224 · 108 S. Ct. 978
- Decided
- March 7, 1988
- Term
- October Term 1987
- Vote
- 4–2
- Majority author
- Justice Blackmun
- Issue area
- Economic Activity
- Disposition
- Vacated and remanded
- Outcome
- Petitioning party lost
- Ideological direction
- Liberal
Opinion excerpt
Justice Blackmun delivered the opinion of the Court. This case requires us to apply the materiality requirement of § 10(b) of the Securities Exchange Act of 1934 (1934 Act), 48 Stat. 881, as amended, 15 U. S. C. § 78a et seq., and the Securities and Exchange Commission’s Rule 10b-5, 17 CPR § 240.10b-5 (1987), promulgated thereunder, in the context of preliminary corporate merger discussions. We must also determine whether a person who traded a corporation’s shares on a securities exchange after the issuance of a materially misleading statement by the corporation may invoke a rebut-table presumption that, in trading, he relied on the integrity of the price set by the market. I Prior to December 20,1978, Basic Incorporated was a publicly traded company primarily engaged in the business of manufacturing chemical refractories for the steel industry. As early as 1965 or 1966, Combustion Engineering, Inc., a company producing mostly alumina-based refractories, expressed some interest in acquiring Basic, but was deterred from pursuing this inclination seriously because of antitrust concerns it then entertained. See App. 81-83. In 1976, however, regulatory action opened the way to a renewal of Combustion’s interest. The “Strategic Plan,” dated October 25, 1976, for Combustion’s Industrial Products Group included the objective: “Acquire Basic Inc. $30 million.” App. 337. Beginning in…
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