Securities and Exchange Commission v. Amster & Co.
United States District Court for the Southern District of New York
762 F. Supp 604 (1991)
Lafer, Amster & Co. (LACO), a New York limited partnership, engaged in the business of risk arbitrage investing. Risk arbitrageurs purchase stock in companies they believe will experience gain in the short term; they aim to sell the stock and profit rather than to hold long term positions. LACO began to buy shares of Graphic Scanning Corp. (Graphic) in 1984. Graphic had publicly announced its intention to liquidate. By August 1985, LACO had acquired a five percent stake in Graphic, and LACO filed a Schedule 13D disclosure as required by Securities and Exchange Commission (SEC) regulations. The Schedule 13D stated that LACO did not have the present intention to gain control of Graphic, and that it supported Graphic’s decision to liquidate its business. It further stated that if Graphic indicated it would not liquidate within a reasonable period of time, LACO would reconsider its position. In January 1986, Graphic made a filing with the SEC stating that it might not proceed with a full liquidation. LACO had several meetings with Graphic. On February 3, 1986, LACO mentioned a possible proxy contest to another Graphic shareholder. On February 10, LACO filed Amendment Six to its Schedule 13D, which stated that it was considering, on a preliminary basis, waging a proxy contest for control of Graphic. On February 28, LACO filed Amendment Seven, stating that it had decided to join with another group of Graphic shareholders seeking control via a proxy contest. The SEC (plaintiff) sued Amster & Co. (defendant), the successor entity to LACO, charging it with violation of §13(d) of the Securities Exchange Act of 1934. The SEC argued that LACO was required to disclose its change in position regarding control sooner; specifically, that LACO needed to disclose its desire to wage a proxy contest before it had decided to take that course of action. Amster & Co. moved for summary judgment.
Rule of Law
Holding and Reasoning (Haight, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 174,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,000 briefs, keyed to 188 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.