Steginsky v. Xcelera Inc.

(United States Second Circuit) – Dismissal of plaintiff-former minority shareholder’s securities fraud claims alleging that defendant-insiders purchased stock by making a tender offer through a shell corporation without disclosing any information about defendant-company’s financial state, is: 1) vacated as to the dismissal of plaintiff’s insider trading claims under sections 10(b), 20(a), and 20A(a) of the Securities Exchange Act, and of her pendent non-federal claims for breach of fiduciary duty, where the duty of corporate insiders to either disclose material non-public information or abstain from trading is defined by federal common law and applies to unregistered securities, and therefore, the district court erred in dismissing plaintiff’s insider trading claims; but 2) affirmed as to the dismissal of her market manipulation claims, and of her insider trading claims under section 14(e) of the Securities Exchange Act.