Opinion ID: 396269
Heading Depth: 4
Heading Rank: 2

Heading: Satisfying the Materiality Test

Text: 31 The issue before us is whether BHC's public shareholders could have protected themselves from financial loss had they known about the plan to freeze them out. An investor can protect himself in other ways than by enjoining the transaction. In Kidwell, for example, we recognized that aggrieved shareholders may have the power to vote down the transaction. 597 F.2d at 1292. In this case, BHC's public shareholders might have sold their stock before the freeze-out at a higher price. Another possibility is that they could have exposed the plan and forced Margala and the others to abort it. The record is clear that the scheme relied on deception and that exposure would have led to adverse publicity, civil actions, and state and federal prosecutions. A reasonable BHC shareholder would have successfully protected himself from financial loss by one or both of these means.