Indiana National Corp. v. Rich

Indiana National Corporation (Indiana National) (plaintiff) was a bank holding company whose stock was registered with the Securities and Exchange Commission (SEC) pursuant to § 12 of the Securities Exchange Act of 1934 (1934 act). In 1981 and 1982, a group of Indiana National’s minority shareholders (defendants) acquired more than 5 percent of Indiana National’s stock, meaning that the Williams Act, which was codified into the 1934 act as § 13(d), required them to file periodic Schedule 13D reports with the SEC. In July 1982, Indiana National sued the minority shareholders, alleging that they violated § 13(d) because their Schedule 13D filings were materially false and misleading. Indiana National sought an order compelling the minority shareholders to file an amended Schedule 13D to correct the asserted deficiencies and an injunction prohibiting the minority shareholders from acquiring more Indiana National shares and requiring them to dispose of the shares they allegedly acquired unlawfully. The minority shareholders moved to dismiss the suit, arguing there is no implied right of action for issuers under § 13(d). The SEC filed a friend-of-the-court, or amicus curiae, brief observing that a Schedule 13D is sent only to the issuer and asserting that only issuers have the capacity and incentive to monitor compliance with the requirements of § 13(d). The district court dismissed the complaint. Indiana National appealed.