Brief Fact Summary. Respondent Borak was a shareholder in Petitioner J.I. Case Co. Respondent brought a private action against Petitioner for releasing a misleading proxy statement prior to a merger.
Synopsis of Rule of Law. The Securities and Exchange Act, under Section: 27, grants private parties the right to bring a suit against a party for violating Section: 14(a) of the Act.
Certiorari was granted to review the state court judgment.View Full Point of Law
Issue. The issue is whether Section: 27 allows a private party to bring a Section: 14(a) action.
Held. A private party can bring a Section: 14(a) action through the use of Section: 27. Congress intended on providing methods of redress to prevent deceptive practices of corporate officers. The Securities & Exchange Commission do not have the resources to thoroughly investigate each of the 2,000 proxy statements it receives annually, and it would be counterintuitive to rely solely on the Commission’s findings. The language of the Act does not prohibit private actions, but instead implies the right.
Discussion. Similarly to the cases regarding inside information, the Court looks at the overall purpose of the Securities Act to determine which outcome will best serve the purpose. In this case, allowing private parties the right to bring an action best supports the purpose.