Opinion ID: 561777
Heading Depth: 1
Heading Rank: 2

Heading: the securities claim

Text: 8 Section 14(a) of the Securities Exchange Act prohibits any person from soliciting proxies in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for protection of investors. 15 U.S.C. Sec. 78n(a). The SEC promulgated Rule 14a-9 thereunder, which provides: 9 No solicitation subject to this regulation shall be made by means of any proxy statement, form of proxy, notice of meeting or other communication, written or oral, containing any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to correct any statement therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading. 10 17 C.F.R. Sec. 240.14a-9 (1990). 11 It is well established that shareholders have a private right of action under Section 14(a) and Rule 14a-9 against issuers of allegedly false or misleading proxy materials. See J.I. Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964). As the Borak Court reasoned: While [Section 14(a)'s] language makes no specific reference to a private right of action, among its chief purposes is the 'protection of investors,' which certainly implies the availability of judicial relief to achieve that result. Id. at 432, 84 S.Ct. at 1559-60. 12 To say that shareholders have a private right of action under Section 14(a) is not necessarily to say that shareholders may unleash Section 14(a) even without a meaningful link between the claimed proxy violation and the shareholder's role qua shareholder. This case, then, tests the margins of the Borak doctrine. Plaintiffs claim that their status as shareholders of Realist gives them carte blanche under Section 14(a) to seek damages for the expenses they incurred in a materially different capacity: as proxy contestants. 6 Thus, the issue before us is not whether there is a private remedy, or even who may invoke that remedy, cf. Piper v. Chris-Craft Industries, Inc., 430 U.S. 1, 55 n. 4, 97 S.Ct. 926, 956 n. 4, 51 L.Ed.2d 124 (1977) (Stevens, J. dissenting), but when or, put another way, under what circumstances, that remedy may be invoked.