A shareholder who was buying additional shares in Wayport, Inc., told the shareholder seller "he was not aware of any bluebirds of happiness in the corporation's world." However, at the time the buyer made the statement he was aware that the CEO had informed the board via e-mail of a patent sale by Wayport that meant that the corporation would receive net proceeds of $7.6 million and would increase its year-end cash position by 22%. Which of the following statements is correct?

Question

Quizplus · Accepted Answer

The buyer made a false statement about not knowing any positive developments in the corporation's world, while being aware of the patent sale and its financial impact. This statement can be considered material misrepresentation or omission, giving rise to a 10(b) claim by the seller. The other choices are incorrect because a statement does not need specific numbers to be material, and the buyer's position in the corporation is irrelevant to the issue of misrepresentation or omission.

A Shareholder Who Was Buying Additional Shares in Wayport, Inc