Nature of the Case
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Facts
Edper owned 5% of Brascan, a Canadian company. Brascan was not a reporting company. However, Section 14(e) was applicable to Edper if it made open market shares amounting to a tender offer. Edper proposed a friendly acquisition to Brascan. Brascan rebuffed and then decided to acquire Woolworth, as a defensive move. Edper then decided to purchase 3 million more shares of Brascan and to do so in New York to avoid Canadian law. The buy orders were put in for one million shares, but they could not be filled. Connacher, a Canadian brokerage house that was advising Edper immediately contacted Gordon Securities who in turn contacted 30-50 institutional investors and 10-15 individual investors who held large blocks of Brascan shares. They were told that if 3-4 million shares were put up for sale on the American Stock Exchange that Edper would buy them at a premium of $22 3/4 per share, several dollars above the current trading price. After learning that stock was available, Edper began to advance its bid and suddenly when it hit the magic number of $22 3/4 it suddenly acquired 2.4 million shares and by the end of the day had purchased 3.1 million shares. Canadian officials inquired and were told the stock was purchased in New York and that no more purchases were planned. That was true when stated, but overnight Edper changed its mind. Without any public announcements, Edper began purchasing the next day. Another 3.2 million shares were purchased. Brascan then sued Edper for violation of the Williams Act 14(e) and Rule 10b-5. Liability was found under 10b-5 but not the Williams Act as there was no tender offer. Brascan appealed.
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