The United States Court of Appeals for the Fourth Circuit has affirmed the dismissal of a securities fraud class action by selling shareholders, holding that a statement that "[w]e're not a company that's for sale," made by its CEO shortly before the company announced that it had reached a merger agreement, was not actionable. The Court held that, viewed in the context in which it was made, the statement was not materially misleading. Among other things, the CEO's remarks were made while he was commenting on a favorable earnings report issued by the company. In addition, articles reporting his remarks noted that the field in which the company did business was rapidly consolidating. Independently, the Court concluded that the complaint failed adequately to allege that the CEO had acted willfully or recklessly in making the statement at issue. (Phillips v. LCI International, Inc., Fed. Sec. L. Rep. 90,645 (CCH) 4 th Cir., 9/15/99)
Denial That Company For Sale Not An Actionable Misstatement
This article was edited and reviewed by FindLaw Attorney Writers | Last reviewed March 26, 2008
This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw’s team of legal writers and attorneys and in accordance with our editorial standards.
The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area.
Was this helpful?