Artificially Affecting Market Activity Through Lock-Up Agreements--Manipulation Under Section 14(e): Data Probe Acquisition Corp. v. Datatab, Inc.
D. N. Fanning · St. John's University School of Law (St. John's University) · 2012
Section 14(e) of the Williams Act (the Act) 1 prohibits any person from "engag [ing] in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer."'2 In light of section 14(e), some courts and commentators recently have questioned the validity of various defensive tactics s employed by target 1 15 U.S.C. § § 78m(d)-(e), 78n(d)-(f) (1982). 2 Id.§ 78n(e).Section 14(e) of the Williams Act provides:It shall be unlawful for any person to make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or to engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer or request or invitation for tenders, or any solicitation of security holders in opposition to or in favor of any such offer, request, or invitation.The Commission shall, for the purposes of this subsection, by rules and regulations define, and prescribe means reasonably designed to prevent, such acts and practices as are fraudulent, deceptive, or manipulative.15 U.S.C. § 78n(e) (1982).Although neither Congress nor the Securities Exchange Commission has defined "tender offer" for purposes of the Williams Act, see, e.g., Smallwood v. Pearl Brewing Co., 489 F.2d 579, 596 (5th Cir.), cert.denied, 419 U.S. 873 (1974); L. SODER-QUIST, SEcuRTIEs REGULATION 487 (1982), there is general recognition that a tender offer is a proposal by a bidding corporation to purchase for cash, stock or a combination thereof, a controlling percentage of the outstanding shares of another corporation, at a price usually above the current market price of the stock, 2 B. Fox & E. Fox, CORPORATE AcQUISIrlONS