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IN RE CENDANT CORP. LITIGATION

July 27, 1999

IN RE CENDANT CORPORATION LITIGATION.


The opinion of the court was delivered by: Walls, District Judge.

      OPINION

I. Introduction

This matter is before the Court on the motions of the HFS defendants, the CUC defendants, Christopher K. McLeod, and Ernst & Young to dismiss Lead Plaintiffs' complaint. With the exception of Ernst & Young's motion to dismiss the § 10(b) and Rule 10b-5 claims against it for stock purchases made after April 15, 1998, defendants' motions to dismiss the complaint are denied.

II. Background

Cendant Corporation ("Cendant") was formed by the merger of CUC International, Inc. ("CUC") and HFS Incorporated ("HFS") on December 17, 1997. CUC was the surviving corporation and it was renamed "Cendant" after the merger. Holders of HFS common stock were issued shares of CUC common stock pursuant to a Registration Statement dated August 28, 1997 ("Registration Statement") and a Joint Prospectus. (Am.Compl. ¶ 33.) Because CUC was the surviving corporation, CUC shareholders did not exchange their stock as part of the merger.

On March 31, 1998, Cendant filed its Form 10-K Annual Report with the SEC including its 1997 financial statements. Two weeks later, after the close of the stock market on April 15, 1998, Cendant announced that it had discovered accounting irregularities in certain former CUC business units. As a result, it announced that it expected to restate its annual and quarterly financial statements for 1997 and possibly for earlier periods as well. The next day, Cendant's stock fell 47%, from $35 5/8 to $19 1/16 per share. Shareholder suits were then filed in this and other districts against Cendant, its officers and directors, and other parties including Ernst & Young LLP ("E & Y"). E & Y had acted as CUC's independent public accountant from 1983 through the formation of Cendant, and afterwards, audited the financial statements of Cendant Membership Services ("CMS"),*fn1 a wholly owned subsidiary of Cendant, for the year ended December 31, 1997. These financial statements of CMS were consolidated into Cendant's financial statements and included in Cendant's Form 10-K for the 1997 fiscal year, filed with the SEC. On July 14, 1998, Cendant announced that it would restate CUC's annual and quarterly financial statements for 1995 and 1996 as well as 1997. Following this announcement, Cendant's stock fell by another 9 % to $15 11/16 per share. Finally, on August 28, 1998, Cendant filed with the SEC a report prepared by Willkie Farr & Gallagher, the law firm it had engaged to perform an independent investigation, which disclosed, among other things, that Cendant would restate its 1995, 1996, and 1997 financial statements by approximately $500 million. Cendant's stock then fell by 11% to $11 5/8 on August 31, 1998, the first trading day after Cendant's disclosure of the financial report. Lead Plaintiffs allege that Cendant's market capitalization dropped from $30.4 billion before the April 15, 1998 disclosure to $9.9 billion on August 31, 1998, for a loss of $20.5 billion.

This Court consolidated all the shareholder suits against Cendant, with the exception of a shareholder derivative action, through a Consolidation Order dated May 29, 1998.*fn2 On September 8, 1998, this Court appointed the California Public Employees' Retirement System, the New York State Common Retirement Fund and the New York City Pension Funds ("the CalPERS group") collectively as the Lead Plaintiffs for all Cendant shareholders other than holders of Feline Prides derivative products ("Prides"). Welch & Forbes was selected as Lead Plaintiff for the Prides holders. The Court then conducted an auction to determine the lowest qualified bidders to represent the Cendant shareholders and the Prides holders as counsel. After the auction, the Court approved the Lead Plaintiffs' choice of counsel and appointed Kaufman Malchman Kirby & Squire, LLP*fn3 as Lead Counsel for the Prides holders and Bernstein Litowitz Berger & Grossman LLP and Barrack, Rodos & Bacine as Lead Counsel for the remaining Cendant shareholders. (October 9, 1998 and October 13, 1998 Orders.)

Following the selection of lead plaintiff and approval of lead counsel, on December 14, 1998, the CalPERS group filed an amended and consolidated class action complaint on behalf of all persons and entities who purchased or acquired Cendant or CUC publicly traded securities, excluding Prides, during the period of May 31, 1995 through August 28, 1998 (the "class period"), and were injured thereby. Concurrently, the CalPERS group filed a motion for class certification which was granted by this Court on January 27, 1999. The complaint named as defendants Cendant, E & Y, and individual officers and directors of Cendant, CUC, and HFS. The complaint alleges that defendants Walter Forbes, E. Kirk Shelton, Christopher K. McLeod, Cosmo Corigliano, and Anne M. Pember were officers of CUC before the merger, reviewed or were aware of the false and misleading statements alleged in the complaint, and "were in a position to control or influence their contents or otherwise cause corrective or accurate disclosures to have been made." (Am. Compl. ¶¶ 16-17.) The complaint asserts that the following defendants, together with defendants Walter Forbes, Shelton, and McLeod, were members of CUC's Board of Directors before the merger, signed the Registration Statement, and were named therein as directors of Cendant upon the completion of the merger: Burton C. Perfit, T. Barnes Donnelley, Stephen A. Greyser, Kenneth A. Williams, Barlett Burnap, Robert P. Rittereiser, and Stanley M. Rumbough, Jr. (Id. at ¶ 18.) All of the named officers of CUC are known collectively as the "CUC individual defendants." The following defendants, except Scott Forbes, were directors of HFS before the merger and were named in the Registration Statement, as directors of Cendant upon the completion of the merger: Henry R. Silverman, John D. Snodgrass, Michael P. Monaco, James E. Buckman, Scott E. Forbes, Steven P. Holmes, Robert D. Kunisch, Leonard S. Coleman, Christel DeHaan, Martin L. Edelman, Brian Mulroney, Robert E. Nederlander, Robert W. Pittman, E. John Rosenwald, Jr., Leonard Schutzman, and Robert F. Smith (collectively, the "HFS individual defendants"). Scott Forbes served as the Senior Vice President-Finance of HFS and then Cendant from August 24, 1993 to April 15, 1998, and has been the Executive Vice President and Chief Accounting Officer of Cendant since April 15, 1998.

Plaintiffs claim that defendants made several materially false and misleading statements during the class period. Plaintiffs allege that a number of CUC and Cendant's filings with the SEC from June, 1995 through April, 1998 were materially false and misleading as were their press releases from May 31, 1995 through June 2, 1998 in which they announced their quarterly and annual earnings. (Am. Compl. ¶¶ 66-67.) These press releases and SEC filings, according to plaintiffs, contained or incorporated by reference Cendant and CUC financial statements that were not prepared in conformity with Generally Accepted Accounting Principles ("GAAP") and contained other assertions that were materially false and misleading. (Am.Compl. ¶¶ 68-82.) In particular, plaintiffs allege that Cendant and CUC overstated their revenues, net income, and operating income for the 1995, 1996, and 1997 fiscal years through various improper accounting practices. These included manipulation of merger reserves (reserves created which consist of the anticipated future costs of a business combination), irregular revenue recognition practices, CUC's improper accounting for membership cancellations, as well as a number of other improper accounting practices by CUC and its subsidiaries including Comp-U-Card. (Am.Compl. ¶¶ 71-78.)

In addition, plaintiffs assert that the August 28, 1997 Registration Statement and the Joint Proxy Statement/Prospectus were materially false and misleading because of the financial statements incorporated by reference therein, misrepresentations contained in the Merger Agreement which was an appendix to the Joint Proxy Statement/Prospectus, and misrepresentations regarding the "due diligence" conducted by HFS in connection with the merger. (Am.Compl. ¶¶ 86-102.) Plaintiffs maintain that E & Y failed to audit CUC's annual reports for 1995, 1996, and 1997 in accordance with Generally Accepted Auditing Standards ("GAAS") and review standards established by the American Institute of Certified Public Accountants (the "AICPA"). (Am.Compl. ¶ 7.) Plaintiffs claim that E & Y's misrepresentations included: its assertions in its certification that it had audited CUC's financial statement in accordance with GAAS, that it had planned and performed those audits to obtain reasonable assurance about whether the financial statements were free of material misstatements, that in its opinion, CUC's financial statements presented CUC's financial position fairly, in conformity with GAAP, and that its audits provided a "reasonable basis" for its opinions. (Am. Compl. ¶ 134.)

Plaintiffs claim that all defendants violated § 11 of the Securities Act of 1933 (the "Securities Act"), 15 U.S.C. § 77k, that Cendant violated § 12(a)(2) of the Securities Act, 15 U.S.C. § 77l(a)(2), that defendants Walter Forbes, Shelton, McLeod, and Corigliano violated § 15 of the Securities Act, 15 U.S.C. § 77o, that defendants Cendant, Walter Forbes, Shelton, McLeod, Corigliano, Pember, Silverman, Snodgrass, Monaco, Buckman, Scott Forbes, and E & Y violated § 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. § 240.10b-5, that defendants Walter Forbes, Shelton, McLeod, Corrigliano, Pember, Silverman, Snodgrass, Monaco, Buckman, and Scott Forbes violated § 20(a) of the Exchange Act, 15 U.S.C. § 78t(a), that defendants Walter Forbes, Shelton, McLeod, Corrigliano, Silverman, Snodgrass, and Buckman violated § 20A of the Exchange Act, 15 U.S.C. § 78t-1, and that Cendant, the HFS individual defendants except Scott Forbes and the CUC individual defendants except Pember violated § 14(a) of the Exchange Act, 15 U.S.C. § 78n(a) and Rule 14a-9, 17 C.F.R. § 240.14a-9.

Defendants Burnap, Donnelley, Greyser, Perfit, Rittereiser, and Rumbough (collectively, "CUC defendants"), move to dismiss the claims against them under § 11 of the Securities Act and § 14(a) of the Exchange Act on the grounds that Lead Plaintiffs have failed to plead fraud with particularity in violation of Fed.R.Civ.P. 9(b) and that they have failed to state a § 11 claim. Defendant McLeod moves to dismiss the complaint against him on the grounds that (1) Lead Plaintiffs have failed to plead fraud with particularity with regard to the §§ 11, 10(b), and 14(a) claims; (2) that they have failed to state a § 10(b) claim because they have failed to plead scienter; (3) that they have failed to state a claim for insider trading under § 20A; and (4) that they have failed to state §§ 11, 15, and 20(a) claims. All the HFS individual defendants move to dismiss the complaint against them on the grounds that (1) plaintiffs have failed to state a § 10(b) claim because they have not adequately plead scienter; (2) they have failed to state a § 14(a) claim because the HFS defendants reasonably relied on information provided by independent experts; (3) they have failed to state a claim under § 20(a) because they have not alleged culpable participation in a fraudulent scheme; (4) that they have not stated a § 20A claim against Silverman, Buckman or Snodgrass because they have failed to plead an underlying violation of the Exchange Act and they cannot seek damages under both § 10(b) and § 20A; and (5) that a § 10(b) cannot be based upon statements made by Cendant after April 15, 1998 in light of the Court's decision in P. Schoenfeld Asset Management LLC v. Cendant Corp., 47 F. Supp.2d 546 (D.N.J. 1999). E & Y moves to dismiss the complaint against it on the grounds that (1) Lead Plaintiffs have not stated a claim under § 10(b) for stock purchases made after Cendant's April 15, 1998 announcement; (2) they have not plead facts giving rise to a strong inference of scienter; (3) they have failed to state a § 10(b) claim for any CUC or Cendant securities other than common stock; (4) their §§ 10(b) and 11 claims should be dismissed because they have failed to plead fraud with particularity; (5) they have failed to state a § 11 claim for class members who were not eligible to vote on the merger; (6) all individual plaintiffs other than Lead Plaintiffs should be dismissed without prejudice because they are members of the class and there is no need for them to be named individually. Lead Plaintiffs oppose all of these motions. Lead Plaintiff for the Prides class also opposes the motions of E & Y and the HFS defendants to dismiss the post-April 15, 1998 claims.

III. Discussion

A. Motion to Dismiss Standard

On a motion to dismiss pursuant to Fed. R.Civ.P. 12(b)(6), the court is required to accept as true all allegations in the complaint, and all reasonable inferences that can be drawn therefrom, and to view them in the light most favorable to the non-moving party. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 (3d Cir. 1994). The question is whether the claimant can prove any set of facts consistent with his/her allegations that will entitle him/her to relief, not whether that person will ultimately prevail. See Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984). While a court will accept well-pleaded allegations as true for the purposes of the motion, it will not accept unsupported conclusions, unwarranted inferences, or sweeping legal conclusions cast in the form of factual allegations. See Miree v. DeKalb County, Ga., 433 U.S. 25, 27 n. 2, 97 S.Ct. 2490, 2492 n. 2, 53 L.Ed.2d 557 (1977). Moreover, the claimant must set forth sufficient information to outline the elements of his claims or to permit inferences to be drawn that these elements exist. See Fed.R.Civ.P. 8(a)(2); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). The Court may consider the allegations of the complaint, as well as documents attached to or specifically referenced in the complaint, and matters of public record. See Pittsburgh v. West Penn Power Co., 147 F.3d 256, 259 (3d Cir. 1998); see also 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 at 299 (2d ed. 1990).

B. Section 11 of the Securities Act of 1933

McLeod and the CUC defendants move to dismiss the § 11 claims against them on the grounds that plaintiffs have failed to plead fraud with particularity in accordance with Fed.R.Civ.P. 9(b) and they (the defendants) have an affirmative defense because after a reasonable investigation, they had reasonable grounds to believe and did believe at the time the Registration Statement became effective that it was true and complete. Defendant E & Y moves to dismiss the § 11 claim against it because, it argues, plaintiffs have failed to plead fraud with particularity and the HFS shareholders who were not eligible to vote on the merger proposal do not have standing to bring a § 11 claim. Plaintiffs rejoin that their § 11 claim is based upon negligence, not upon fraud. They assert that § 11 does not require pleading or proof of fraudulent intent to establish a violation, and even if it did, they have more than adequately satisfied the pleading requirements of Fed.R.Civ.P. 9(b). Plaintiffs also assert that § 11 does not require a plaintiff to have been eligible to vote on a merger; the only standing requirement for a § 11 claim is that the plaintiff exchanged his/her stock for stock in a merger.

Section 11 of the Securities Act of 1933, 15 U.S.C. § 77k, provides for damages caused by a false or misleading registration statement. If the registration statement "contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading," then "any person acquiring such security" may sue a number of enumerated individuals and entities. 15 U.S.C. § 77k(a). In particular, acquirers of the security may sue:

  (1) every person who signed the registration
  statement; (2) every person who was a director of (or
  person performing similar functions) or partner in
  the issuer at the time of the filing of the part of
  the registration statement with respect to which his
  liability is asserted; (3) every person who, with his
  consent, is named in the registration statement as
  being or about to become a director, person
  performing similar functions, or partner; (4) every
  accountant, engineer, or appraiser, or any person
  whose profession gives authority to a statement made
  by him, who has with his consent been named as having
  prepared or certified any part of the registration
  statement, or as having prepared or certified any
  report or valuation which is used in connection with
  the registration statement, with respect to the
  statement in such registration statement, report, or
  valuation, which purports to have been prepared or
  certified by him; (5) every underwriter with respect
  to such security.

15 U.S.C. § 77k(a). Section 11 does not require a showing of intent or scienter. Unless it is proven that, at the time of the acquisition, the purchaser of the security knew of the untruths or omissions in the registration statement, all of the named persons and entities are liable to anyone who acquired the security. The person who acquired the security is not required to prove that s/he relied upon the untrue statements contained in the registration statement unless s/he acquired the security "after the issuer has made generally available to its security holders an earning statement covering a period of at least twelve months beginning after the effective date of the registration statement." 15 U.S.C. § 77k(a). Because the securities at issue here were not acquired after the release of such an earning statement, there is no reliance requirement for a § 11 claim.

1. The Applicability of § 9(b) to Plaintiffs' § 11 Claim

The CUC defendants, McLeod, and E & Y argue that plaintiffs have failed to state a § 11 claim because they have failed to plead fraud with particularity. The CUC defendants contend that the complaint "makes no effort whatsoever to plead particularized allegations of wrongdoing" as to each of them and that the complaint is replete with impermissible "group pleading" allegations. (CUC Mem. at 14-15.) Although the complaint alleges that defendants Perfit, Donnelley, and Greyser were members of CUC's Audit Committee, the CUC defendants argue that "the mere status of a director as a member of the Audit Committee is not sufficient to allege that the individual engaged in fraudulent conduct." (Id. at 15-16.) The CUC defendants also assert that the allegations that defendants Perfit, Donnelley, Burnap, and Rumbough sold CUC or Cendant stock during the class period do not provide particularized support for the fraud-based claims. Similarly, defendant McLeod contends that the complaint's assertions that he was an officer and director of CUC, Cendant, and certain other subsidiaries and that he had knowledge of two accounting practices which were not consistent with GAAP do not satisfy Rule 9(b)'s pleading standard. E & Y argues that it is not enough for plaintiffs to identify false and misleading statements made by it; in addition, they must explain how and why those statements were false and misleading at the time they were made.

Plaintiffs have plead that they exchanged their HFS common stock for CUC common stock pursuant to the August 28, 1997 Registration Statement which contained material misstatements and omissions. (Am.Compl. ¶¶ 113-114.) Christopher McLeod and each of the CUC defendants were directors of CUC at the time the Registration Statement was filed and each of them signed it. (Am. Compl. ¶¶ 16-18, 116.) Plaintiffs claim that none of the individual CUC defendants "made a reasonable investigation or possessed reasonable grounds for the belief that the statements . . . which were contained the Registration Statement, were true, were without omissions of any material facts, and were not misleading." (Am. Compl. ¶ 117.) Plaintiffs claim that E & Y consented to the incorporation by reference of its unqualified audit report on CUC's 1995 and 1996 financial statements and to the reference to it under the caption "Experts" in the Registration Statement. (Am.Compl. ¶ 133.) The financial statements were included in the Registration Statement in reliance upon E & Y's unqualified audit report, given upon the authority of E & Y as experts in accounting and auditing. (Am.Compl. ¶ 133.) Plaintiffs assert that E & Y "did not make a reasonable investigation or possess reasonable grounds for the belief that the statements . . . which were contained in the Registration Statement, were true, were without omissions of any material facts, and were not materially misleading." (Am.Compl. ¶ 134.)

Plaintiffs have established a prima facie § 11 claim against the CUC defendants, McLeod, and E & Y. "If a plaintiff purchased a security issued pursuant to a registration statement, he need only show a material misstatement or omission to establish his prima facie case." Herman & MacLean v. Huddleston, 459 U.S. 375, 382, 103 S.Ct. 683, 687, 74 L.Ed.2d 548 (1983). Plaintiffs have plead that the Registration Statement contained material misstatements and omissions and they have alleged that McLeod, the CUC defendants, and E & Y are within the class of individuals and entities who may be sued pursuant to 15 U.S.C. § 77k(a). "[N]either fraud nor mistake is a necessary element" of a § 11 claim. Shapiro v. UJB Financial Corp., 964 F.2d 272, 288 (3d Cir.), cert. denied, 506 U.S. 934, 113 S.Ct. 365, 121 L.Ed.2d 278 (1992). Section 11 defendants may be held liable for a negligent misrepresentation or omission. Shapiro, 964 F.2d at 288 (citing Herman & MacLean, 459 U.S. at 382, 103 S.Ct. at 687). Where a § 11 claim is based on allegations of fraud, it is subject to the pleading requirements of Fed.R.Civ.P. 9(b). Shapiro, 964 F.2d at 288. However, where, as here, a § 11 claim is based on negligence, Rule 9(b) does not apply. Cf. Shapiro, 964 F.2d at 288 (specifically reserving decision on the issue of whether Rule 9(b) applies to claims that a defendant negligently violated § 11). Plaintiffs' theory of liability under § 11, that defendants had not "made a reasonable investigation or possessed reasonable grounds for the belief that the statements . . . which were contained in the Registration Statement [] were true, were without omissions of any material facts, and were not misleading," sounds in negligence, not in fraud. (Am.Compl. ¶¶ 117, 134.) Unlike the complaint in Shapiro, this complaint does not incorporate allegations of scienter and fraud into the § 11 claim. Rather, here the § 11 claim is plead before any of the other claims. Although the plaintiffs have plead that the defendants acted fraudulently in violation of § 10(b), the § 11 claim is limited to negligence. Plaintiffs have stated a claim for relief against McLeod, the CUC defendants, and E & Y.

2. The Affirmative Defense of McLeod and the CUC Defendants

Section 11(b) provides an affirmative defense to liability under § 11(a). Section 11(b) states that "no person, other than the issuer, shall be liable . . . who shall sustain the burden of proof" that "he had, after reasonable investigation, reasonable ground to believe and did believe, at the time such part of the registration statement became effective, that the statements therein were true and that there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading. . . ." 15 U.S.C. § 77k(b)(3). The burden is on McLeod and the CUC defendants to prove this defense.

McLeod and the CUC defendants argue that dismissal of the § 11 claim against them on the basis of this affirmative defense is not premature because the affirmative defense is established by the pleadings and the August 28, 1998 Cendant Report incorporated therein. Plaintiffs insist that although they referred to the Report in their complaint, "the details contained in the Report, and any conclusions to be drawn from the comments contained in the Report about the participation of certain individuals in activities reported on, are not evidence." (Pl.'s Mem. in Opp. to McLeod at 26.) Plaintiffs argue that the Report cannot be considered on a motion to dismiss to prove the facts asserted therein.

There is merit to plaintiffs' argument. All of the cases cited by the defendants in which § 11 claims were dismissed based on an affirmative defense were decided on motions for summary judgment. See Laven v. Flanagan, 695 F. Supp. 800, 811 (D.N.J. 1988); In re Worlds of Wonder Sec. Litig., 35 F.3d 1407, 1421 (9th Cir. 1994); In re Avant-Garde Computing Inc. Sec. Litig., 1989 WL 103625 (D.N.J. 1989). The existence of the Report does not make it appropriate to consider the affirmative defense as a ground for dismissal at this stage in the litigation. Although the Report was filed with the SEC and referred to in the complaint, the Court may not consider the Report as proof of the facts asserted therein. Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1018 (5th Cir. 1996) (a court may consider documents which are required to be filed with the SEC and are actually filed with the SEC "only for the purpose of determining what statements the documents contain, not to prove the truth of the documents' contents") (citing Kramer v. Time Warner Inc., 937 F.2d 767, 774 (2nd Cir. 1991)); Hennessy v. Penril Datacomm Networks, Inc., 69 F.3d 1344, 1354-55 (7th Cir. 1995) (the district court properly refused to take judicial notice of a corporation's Form 10-K to determine a fact in dispute — the number of corporate employees). The motions of the CUC defendants and McLeod to dismiss the § 11 claim against them are denied.

3. Whether the HFS Shareholder Without Voting Rights Have Standing to Sue under § 11

E & Y argues that only class members who were eligible to vote on the merger have standing to sue under § 11. They contend that those class members who exchanged HFS stock in the merger for CUC stock issued pursuant to the Registration Statement but were not eligible to vote on the merger do not have standing to sue. E & Y argues that a merger transaction requires a registration statement because it involves an offer to sell, but that offer to sell occurs only with respect to those shareholders who are eligible to vote on the merger. Thus, only those shareholders with a right to vote on the merger acquired the securities at issue in response to an offer to sell. In support of this proposition, E & Y refers to SEC Rule 145, 17 C.F.R. § 230.145 which requires companies to file registration statements when they engage in business combinations which require shareholder approval. E & Y asserts that under Gustafson v. Alloyd Co., 513 U.S. 561, 115 S.Ct. 1061, 131 L.Ed.2d 1 (1995) and Shapiro, 964 F.2d at 288, only purchasers who buy directly from the issuer or an underwriter in response to an offer to sell have standing to sue under § 11. By extension, E & Y argues that in the merger context, only those shareholders with a right to vote on the merger and who acquired the securities at issue in response to an offer to sell have standing. (E & Y's Mem. at 36-38.) E & Y argues that those investors who purchased HFS stock after August 18, 1997 (the record date) but before the merger was effected in December, 1997, do not have standing to sue for damages under § 11. ...


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