February 6, 2007
District Court Opinion on SLUSA Delaware Carveout
A federal district court in S.D. Texas held that shareholders could sue the corporation for allegedly misleading statements in the company's preliminary proxy statement prepared in connection with a proposed merger, because it fell within the "Delaware carveout" exception to SLUSA. The court held that the preliminary proxy materials, which were available on the SEC website, constituted "communications ... made by the issuer to its equity security holders" for purposes of the Delaware carveout: "In this day and age, the act of posting information on the internet, making the data available to the public, is tantamount to "communication.... Merely because a copy of the preliminary proxy statement is not physically mailed to shareholders does not exclude it from being a 'communication.' " Superior Partners v. Chang, 2007 WL 101848 (S.D. Yex. 01/08/07).
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