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Sunday, May 26, 2024 | Back issues
Courthouse News Service Courthouse News Service

Shareholders Lose Ruling Over Proxy Solicitation

(CN) - The 7th Circuit dismissed shareholders' claims over an allegedly misleading proxy statement as "too feeble" to proceed. Board members of the Equity Office Property Trust, a real-estate group, mailed a proxy solicitation to shareholders, seeking the approval of a $36 billion sale of the company to Blackstone Group.

The price went up by $3 billion after a bidding war, which Blackstone won over Vornado Realty Trust.

Philip Beck and other shareholders sued, asserting that the bidding war had ended prematurely, and that the company may also have been better off remaining independent.

Judge Posner of the Chicago-based federal appeals court agreed with the district court's dismissal of the case.

"The plaintiff's allegations that the proxy solicitations contained misrepresentations or misleading omissions were too feeble to allow the suit to go forward," Posner wrote.

Also, Posner ruled that state of mind is not a required element of this kind of lawsuit. The judge wrote that a company could be found liable even if it "believed in perfect good faith that there was nothing misleading in the proxy materials."

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