IN RE TIME WARNER SECURITIES LITIGATION
9 F.3d 259 (2nd Cir. 1993)
NATURE OF THE CASE: This was a dispute over the duty to disclose.
FACTS: Ps were stockholders who purchased D stock during the period when the company was
allegedly misrepresenting the status of its ongoing search for strategic partners to offset
its $10 billion in debt after the merger of Time and Warner Communications. Ps alleged that
D made materially misleading statements and that unnamed sources within the company had
leaked materially misleading information to reporters and securities analysts on which the
market relied. Because of the failure to attract partners, D was forced to offer a new stock
subscription to coerce existing shareholders to purchase stock or face dilution. The stock
fell from $117 per share to $94 per share on one week and eventually declined to $89.75. The
district court found that the company's own statements were accurate when made, that later
events did not give rise to a duty to correct or update them, and that a corporation could
not be held liable for unattributed statements made to the press or security analysts. The
complaint was dismissed. P appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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