Case Study: NACCO Industries v. Applica

January 26, 2010

Publication| Corporate & Chancery Litigation

The Court of Chancery declined to dismiss claims of common law fraud arising from allegedly false and misleading statements made in federal securities filings.  The Delaware courts, it held, have jurisdiction to consider such claims and are not preempted by Section 27 of the Securities and Exchange Act of 1934, which confers exclusive jurisdiction to federal courts over actions brought to enforce Exchange Act rules.

The holding suggests that practitioners should be aware that, in connection with a transaction involving a Delaware entity, there may be state law liability for false or misleading disclosure, in addition to any liability under federal securities laws.

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