Questions Raised on Required Clarity of Disclosures in SEC Filings

August 23, 2017


Two recent decisions of the Delaware Court of Chancery separated by only two weeks took seemingly contradictory positions regarding the extent to which corporate disclosures must be made clear in proxy statements and other SEC filings. In an order issued on March 7 in In re Columbia Pipeline Group Stockholder Litigation, C.A. No. 12152-VCL (Del. Ch. Mar. 7, 2017), the court invoked the business judgment rule under Corwin v. KKR Financial Holdings, 125 A.3d 304 (Del. 2015), to dismiss challenges related to a stockholder-approved merger. In so holding, the court rejected the plaintiffs’ position that the stockholder vote was uninformed by virtue of the target corporation’s failure to disclose the ownership stake of Goldman, Sachs & Co., financial adviser to the target, in the acquiror. Citing the Court of Chancery’s decision in In re Micromet Shareholders Litigation, C.A. No. 7197-VCP (Del. Ch. Feb. 29, 2012), the court ruled that Goldman’s disclosure of this stake in a 2016 319-page SEC filing on Form 13F was sufficient.

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