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Akerman v. Oryx Communications, Inc.

United States Court of Appeals for the Second Circuit
810 F.2d 336 (1987)


Facts

In 1981, Oryx Communications, Inc. (defendant) had an initial public offering (IPO) of shares of its company. The offering was priced at $4.75 on June 30, 1981. In its registration statements for the IPO, Oryx mistakenly accounted for a large transaction that took place in April in its March financial statements. This caused Oryx’s revenue to appear greater than it was in reality. Oryx informed the SEC of this mistake on October 15, 1981, at which time Oryx’s stock was priced at $4.00 per share. Oryx then disclosed the mistake to the public, at which time its stock was valued at $3.25 per share. This suit was commenced by shareholders (Akerman) (plaintiff) two weeks after the public disclosure, at which time the stock had increased to $3.50 per share. Akerman asserted that he was entitled to the difference between the value of the stock prior to disclosure of the mistake and the value after the disclosure. The district court ruled in favor of Akerman. Oryx appealed to the Second Circuit Court of Appeals.

Rule of Law

Issue

Holding and Reasoning (Meskill, J.)

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