HOLDER CLAIMS – POTENTIAL CAUSES OF ACTION IN DELAWARE AND BEYOND?

Last spring, in a widely anticipated opinion in Citigroup Inc. v. AHW Investment Partnership, Chief Justice Strine, speaking for a unanimous Delaware Supreme Court, warned of the dangers of recognizing causes of action by persons who claim they were misled into holding rather than selling their secu...

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Bibliographic Details
Published in:The Delaware journal of corporate law 2017-01, Vol.41 (3)
Main Author: McDermott, Edward T
Format: Article
Language:English
Subjects:
Commercial law
False information
Fraud
Law
Liability
Losses
Misrepresentation
Securities fraud
State court decisions
Stockholders
Torts
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Summary:Last spring, in a widely anticipated opinion in Citigroup Inc. v. AHW Investment Partnership, Chief Justice Strine, speaking for a unanimous Delaware Supreme Court, warned of the dangers of recognizing causes of action by persons who claim they were misled into holding rather than selling their securities. However, the Delaware Supreme Court did not address directly the legal cognizability of holder claims. This essay attempts to fill that gap by analyzing the arguments both for and against holder claims. First, the nature of holder claims are described and explored. Then, the acceptance or rejection of holder claims by various courts throughout the United States is examined. Next, the arguments in opinions that have recognizing holder claims are considered. Finally, the essay concludes that, even though some arguments in opinions rejecting holder claims are not persuasive, serious conceptual problems and equitable considerations at the core of holder claims should lead courts in Delaware and other states to rule categorically that holder claims are not legally cognizable.
ISSN:0364-9490
1943-7331