Jos. Schlitz Brewing Company (Schlitz) (defendant) was a company that sold beer and malt beverages. The Securities and Exchange Commission (SEC) (plaintiff) brought an action against Schlitz, alleging that Schlitz had violated federal securities laws. These allegations included claims that Schlitz had failed to disclose a scheme in which Schlitz bribed retailers to purchase Schlitz’s products by giving the retailers kickbacks of over $3,000,000. Even though Schlitz was warned by the SEC that the practices had to be terminated, Schlitz failed to do so before the action was brought. Additionally, the SEC argued that: (1) Schlitz had failed to disclose its participation in violations of Spanish tax laws, and (2) Schlitz had falsified its records regarding the Spanish transactions. The SEC argued that due to these lack of disclosures, Schlitz’s financial statements, registration statements, periodic reports, and proxy materials were materially misleading. Schlitz moved for summary judgement.