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Feder v. Frost

United States Court of Appeals for the Second Circuit
220 F.3d 29 (2000)


Facts

Philip Frost (defendant) was the Chairman and CEO of IVAX. He was also the sole general partner and shareholder of FNLP, which owned 12.8 percent of IVAX’s stock. Frost was also a director and owned 17.3 percent of NAVI. Frost and FNLP together owned 50.8 percent of NAVI stock. At several different times in 1995 and 1996, Frost and FNLP purchased shares of IVAX, and NAVI sold shares of IVAX. NAVI earned substantial profits from its sale of IVAX stock. Feder then brought suit against Frost, alleging that he had engaged in insider trading in violation of § 16(b) of the Exchange Act, as he was a beneficial owner of IVAX, since he controlled more than ten percent of IVAX stock. Feder argued that Frost was required to report his dealings in its stock pursuant to SEC Rule 16a-1, and in not doing so, he engaged in insider trading in violation of § 16(b). The district court ruled in favor of Frost. Feder then appealed to the Second Circuit Court of Appeals.

Rule of Law

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Issue

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Holding and Reasoning (Winter, C.J.)

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  • A "yes" or "no" answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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