Securities and Exchange Commission v. Texas Gulf Sulphur Co.
United States Court of Appeals for the Second Circuit
401 F.2d 833 (2d Cir. 1969)
Texas Gulf Sulphur Co. (TGS) began drilling on a site in Canada and found high mineral content. To keep the purchase price of the site low, TGS kept the results of the drilling quiet. When word of the high mineral content of the site started to get out, TGS released a statement saying that the reports were exaggerated and that reports of the content of the site were inconclusive. Between that statement and TGS’s official announcement of the discovered copper ore four days later, the TGS secretary, a TGS director, and a TGS engineer (defendants) all bought TGS stock. The SEC started an investigation and eventually brought suit. The trial court found in favor of the defendants. The SEC appealed.
Rule of Law
Holding and Reasoning (Waterman, J.)