Opinion ID: 350232
Heading Depth: 2
Heading Rank: 4

Heading: Introduction of New Products

Text: 44 The Commission lastly considers material Schuman's disclosure that the aphakic lens and minikit would not be available in the first quarter. B & L's expectations in this regard, however, can only be considered routine operational details which like any other addition to a product line, were subject to changes and slight delays. Neither the products themselves, nor their proposed introduction dates, had been touted by the company in releases or other public statements, although they were listed on B & L's basic Soflens sales policy and price list which was distributed to the Soflens sales force on or before March 1st. In addition, the company disclosed this information to anyone else who requested it. 45 Although B & L had projected internally on February 15th that the two products would constitute 21/2 percent of its first quarter sales, and a considerably larger portion of its profits, it must have been abundantly clear to any interested investor on March 16 that the sales of aphakics and minikits would not have a significant impact on B & L's earnings during the first quarter of 1972. Applying the admonition of Geon Industries that not only the probability of an event but also the magnitude of its potential impact on a company's fortunes are relevant to the determination of materiality, 531 F.2d at 47, Judge Ward correctly ruled that this information was not sufficiently important to warrant a finding of materiality. This conclusion is further bolstered by a consideration of the importance attached to the new product information by those who knew about it a factor which has long been considered a major index of materiality. See SEC v. Shapiro, 494 F.2d 1301, 1307 (2d Cir. 1974); SEC v. Texas Gulf Sulphur, supra, 401 F.2d at 851. Significantly, none of Schuman's interviewers considered his revelations about new products of any moment. Clancy did not even remember hearing it. 46 Moreover, comparison of the analysts' disparate reactions to their interviews supports the conclusion that none of the allegedly material information conveyed to them was in fact material. MacCallum, of course, merely executed his pre-interview decision to withdraw his buy recommendation. Wien, concerned by B & L's failure to counteract adverse publicity, wanted to sell all of his firm's holdings, but Clancy, after attending the same interview, was convinced that Soflens was basically a strong product and believed only a third of the Brokaw shares should be sold. And Sanders affirmed his buy recommendation and his firm purchased a small number of B & L shares for its discretionary accounts. Far from eloquently attesting to the materiality of Schuman's disclosures, these basically indifferent responses support Judge Ward's conclusion that the information was not material.