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Itoba Ltd. v. Lep Group PLC

United States Court of Appeals for the Second Circuit
54 F.3d 118 (1995)


Lep Group PLC (Lep) (defendant) is a holding company based out of England, with many different subsidiaries. A.D.T. Limited (A.D.T.), a Bermuda holding company, attempted a takeover of Lep in 1990. Prior to the takeover, an investment bank in London was hired to research Lep’s financial health. Based on several documents Lep filed with the Securities and Exchange Commission (SEC) in relation to its stock offering in the United States, it was determined that Lep was a sound investment. A.D.T. attempted the takeover, first by making stock purchases through its subsidiary in England, Itoba Ltd. (plaintiff), a Channel Islands corporation. Shortly after these stock purchases, Lep’s stock price fell sharply. This was due to a disclosure indicating that Lep’s financials were not as sound as had been reported. Itoba then brought suit against Lep in the United States District Court for the District of Connecticut for violation of § 10(b) of the Exchange Act. The court dismissed the suit for lack of subject matter jurisdiction. Itoba then appealed to the Second Circuit Court of Appeals.

Rule of Law


Holding and Reasoning (Van Graafeiland, J.)

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