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Business Organizations Keyed to Chasalow, 3rd Ed.
Elkind v. Liggett & Myers, Inc.
Citation:
635 F.2d 156 (1980)Facts
In 1969, Liggett & Myers initiated an “analyst program” to improve its stock price by encouraging closer contact between company management and financial analysts. After a record year in 1971 and a strong first quarter in 1972, financial analysts were optimistic about Liggett’s prospects. However, by April 1972, Liggett was experiencing a significant earnings downturn, which was not publicly disclosed. On July 10, 1972, Liggett’s Director of Corporate Communications allegedly tipped analyst Peter Barry that preliminary earnings would be released soon, leading Barry to deduce that earnings would be lower than expected. On July 17, Liggett’s chief financial officer allegedly confirmed to analyst Robert Cummins that earnings would likely be down, information Cummins passed to a stockholder who promptly sold 1,800 shares. On July 18, Liggett publicly released its disappointing earnings figures. The district court found both disclosures to be improper tips and awarded damages based on the difference between what plaintiffs paid for their stock and its value after the information became public.
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