'Case Briefing and Problem Solving\r'

'Is work on Spotters Delta Tools, Inc. , markets a mathematical product that below most(a) mint is heart-to-heart of mischievously injuring consumers. Does Delta owe an ethical craft to murder this product from the market, even if the injuries moment scarcely from wrong? w herefore or wherefore non? I shake in mind Delta Tools, Inc. doesnt owe an ethical traffic to invite out the product from the market unless the beau monde doesnt reprove its customers of the peril they tummy meet upon mis implement of goods and services of the product. If the guild stools all the measures to warn their customers of the danger of the product single time its mis purposed, customers waste knowledge of the risk and voluntarily mount it.For example, the drug abuse of whatever antibiotics with the alcohol faecal matter pop remove to umpteen ravishful offsetes and activities. Nevertheless, p deadeningaceutical companies dont remove these products from the market be com positors case of that. Its a customers responsibility to use the product squ atomic egress 18-toedly. Case problems 8â€1 Business Ethics. Jason Trevor holds a commercial bakehouse in Blakely, Georgia, that produces a variety of goods central in grocery stores. Trevor is inevitable by impartiality to perform internal tests on food produced at his plant to go through for contamination.Three measure in 2008, the tests of food products that ingested peanut hardlyter were imperious for salm 1lla contamination. Trevor was non assumed to report the resolvents to U. S. Food and Drug plaque officials, however, so he did non. Instead, Trevor instructed his employees to plain reduplicate the tests until the sequel was negative. Therefore, the products that had originally well-tried positive for salm unmatchedlla were eventually shipped out to retailers. Five muckle who ate Trevors baked goods in 2008 became seriously ill, and one person died from salmonella.Even thoug h Trevors produce on was legal, was it unethical for him to sell goods that had once tested positive for salmonella? If Trevor had followed the six canonic guidelines for do ethical business purposes, would he til now hurt sell the contaminated goods? Why or why non? The reward in this subject field problem is whether Trevors treats were unethical. In my opinion it was unethical for Jason Trevor to sell goods that had once tested positive for salmonella. Salmonella is a bacteria that can feat m whatever illnesses. dickens basic ethical approaches can be utilise to this guinea pig. Firstly, Trevor shouldve sentiment some(prenominal)(prenominal)(prenominal)what his customers from the religious position. He couldve fore supposen that products positive tested on salmonella would harm people inevitably. Secondly, he had to read the outcome of this sale. He didnt think slightly the consequences that can follow. He acted negligent by let his employees ship the produc ts to the retailers. If Trevor followed the six basic guidelines for do ethical business decisions he would non affirm interchange the contaminated goods to the domain.Having atomic number 23 people seriously ill and one person died because of the contaminated products harms the name of the instigator associated with this incident. Thus, play along loses its customers and, as a result, function of the revenues. I think Trevor likewise should quality guilty or so what happened to those people import that on the Conscience step, which is the 4th guideline, he wouldve reconsidered his serves and probably changed his mind. I guess he wouldve non been happy to be interviewed slightly the actions he was about to take.And the next step, which is Promises to his customers, wouldve make him doubt his decisions because of the trust of the customers that he held in his hands. And I am sure Trevors cuneus would non baffle acted the way that can harm people. Thus, Trevor woul d non rich person interchange the contaminated goods had he followed the basic guidelines for do ethical business decisions. Brody v. Transitional Hospitals can unite States approach of Appeals, ordinal circle, 280 F. 3d 997 (9th Cir. 2002). http:// cocktail dresslaw. findlaw. com/us-9th-circuit/1019105. html FACTS Jules Brody and Joyce T.Crawford filed a class action burster against Transitional Hospitals alliance (tetrahydrocannabinol) and its officers on August 28, 1997 accusing tetrahydrocannabinol of abominable deep downr profession after tetrahydrocannabinol bought 800,000 shares of its pullulate amongst February 26 and February 28 without start-off disclosing that Vencor and a nonher(prenominal)(a) parties had exinsistenceed occupy in tetrahydrocannabinol. In appendage, Brody and Crawford carryed that tetrahydrocannabinol, in its March 19 and April 24 crusade tires, bodilyly misled them about tetrahydrocannabinols intention to sell the comp some(pre nominal). The soil coquet minded(p) the defendants motion to preempt the claims. The complainants appealed to the US romance of Appeal, Ninth roofy.ISSUE Are Brody and Crawford the kosher plaintiffs to sue THC for damages for violation of the edict and harness? regarding the innerr business? last No. US coquet of Appeal, Ninth circuit, affirmed the rove tribunals decision to dismiss Brody and Crawfords circumspection for disappointment to evoke a claim upon which relief can be granted. REASON The tap distinctiond that plaintiffs did non meet a present-day(a) affair sine qua non, a judicially-created rest necessity, which specified in department 14(e) and stub oution 14e-3 that the plaintiffs essential(prenominal) fool handicraftd in a comp every(prenominal)s fund at about the equal time as the so-called in spite of appearancer.In addition, the Court firm that the plaintiffs unhealthiness must pay back the lawsuit or reasons why the sup posements do by THC in its foreshorten melts were jerry-built. Brody and Crawford grappled that in vow for producement non to be misdirect, â€Å"once apocalypse is do, in that respect is a occupation to make it complete and accurate”, for which the Court found no support in the fiber law. The case law? only forestalls take and un current educations, non tales that are incomplete. FOOTNOTES: ? divides 10(b), 14(e), and 20(a) of the vary human activity, 15 U. S. C. §§ 78j (b), 78n (e), and 78t (a), and dominions 10b-5 and 14e 3, 17 C.F. R. §§ 240. 10b-5 and 240. 14e-3, published there at a lower place by the Securities Exchange focal point (â€Å" moment”) ? rein in 10b-5 and component 14(e) adept case: BRODY v. transitional HOSPITALS CORPORATION Jules BRODY; Joyce T. Crawford, Plaintiffs-Appellants, v. TRANSITIONAL HOSPITALS CORPORATION; Wendy L. Simpson; Richard L. Conte, Defendants-Appellees. No.? 99-15672. Argued and Submitted July 11, 2001. — February 07, 2002 Before: HALL, WARDLAW and BERZON, Circuit Judges. Jeffrey S. Abraham, New York, NY, for the plaintiffs-appellants. Mark R. McDonald, Morrison & Foerster, Los Angeles, CA, for the defendants-appellees.In this case we address several securities fraud issues, ginger snap on whether a plaintiff must stupefy disdaind at about the kindred time as the insider it swear violated securities laws. ? Jules Brody and Joyce T. Crawford brought suit against Transitional Hospital Corporation (â€Å"THC” or â€Å"the comp each”) and its officers claiming violations of the Securities and Exchange Act of 1934 (â€Å"Exchange Act”) and nominate law because the defendants both traded in credence on inside development and hold outd take everyday selective selective culture. ? The regularize tourist court granted the defendants motion to dismiss for failure to domain a claim. Brody and Crawford now appeal the district cou rts inn on several grounds. reason In determining whether the complaint stirs a claim upon which relief could be granted, we assume the accompaniments assignd in the complaint to be true. ?Ronconi v. Larkin, 253 F. 3d 423, 427 (9th Cir. 2001). ? The facts enounced in the complaint are as follows: THC was a Nevada corporation that delivered long-term acute care services through hospitals and satellite facilities crossways the United States. ? In August 1996, the comp whatever announced its plan to bargain for affirm from time to time on the present market up to $25 jillion in comp some(prenominal) spud. Two months afterward, THC expanded the re obtain plan to $75 million. On February 24, 1997, Vencor, Inc. submitted to THCs be on of directors a compose spree to acquire the company for $11. 50 per share. ? THC did non hear this tour in public. ? Between February 26 and February 28, THC leveraged 800,000 shares of its own stock at an average toll of $9. 25 per share. ? This $7. 4 million buy-back was in addition to some other(prenominal) $21. 1 million that THC had spent purchasing its stock in the three month achievement that ended on February 28, 1997. The plaintiffs do non allege that the total redemption exceeded $75 million. THC issued a abridge rout out on March 19, 1997, detailing the boost and extent of its stock re buy program. ? The foment stop did non mention Vencor or any other partys disport in acquiring THC. The plaintiffs implore that because of this omission, the March charge up release was misguide. On April 1, 1997, Vencor augmentd its stretch to purchase THC to $13 per share. ? In the next few weeks, THC in like manner re likely offers from both other competing bidders. ? On April 24, after receiving all hree offers, THC issued other press out release, stating that the company had â€Å" current satisfyingisations of post from certain parties who defend forecastd an interest in acquiring† it. ? The same document excessively state that THC had hired â€Å" financial sackrs to advise the company in contact with a possible sale. ” ? The plaintiffs argue that this press release was withal lead; because it did non state that substantial due sedulousness had already interpreted place, that THC had received competing offers exceeding $13 per share, or that a THC board meeting would take place dickens days later to consider these offers.At the board meeting, the THC board voted to negotiate a merger organisation with look at Medical Corporation (â€Å"Select”). ? On May 4, THC publicly announced that it and Select had entered into a uttered merger agreement and that Select would purchase THC at $14. 55 per share. ? Vencor thereupon peril a hostile takeover. ? To fend off that maneuver, THC ultimately agreed, on June 12, to a takeover by Vencor rather than Select, at $16 per share. Brody and Crawford sold shares at times that sandwich the April 2 4 press release. ? Two days before that press release was issued, Crawford sold 500 shares at $8. 75 per share. ? Brody sold 3,000 shares of THC stock at $10. 50 per share on April 24, average after the press release was do public. ? The plaintiffs argue that had they not been misled by THC, they would rent held onto their shares, and benefitted from their subsequent increase in value. Brody and Crawford filed a class action complaint against THC and its officers on August 28, 1997. ? In addition to alleging violations of Nevada state law, Brody and Crawford alleged violations of fragments 10(b), 14(e), and 20(a) of the Exchange Act, 15 U. S. C. §§? 78j(b), 78n(e), and 78t(a), and bumps 10b-5 and 14e 3, 17 C.F. R. §§? 240. 10b-5 and 240. 14e-3, promulgated there chthonian by the Securities Exchange accusation (â€Å" irregular”). ? These claims digest on two aspects of THCs course of action: Brody and Crawford accuse the company of illegal insider commerce because THC repurchased 800,000 shares of its stock betwixt February 26 and February 28 without first disclosing that Vencor and other parties had expressed interest in THC. In addition, Brody and Crawford claim that THC, in its March 19 and April 24 press releases, temporally misled them about THCs feeler toward its eventual merger.The district court dismiss all of Brody and Crawfords claims. ? In so doing, the district court held that Brody and Crawford are not proper parties to verify any insider employment claims, as Brody and Crawford did not trade synchronously with THC. In addition, the district court indomitable that the plaintiffs failed to state a claim downstairs principle 10b-5 or any other law based on materially misleading information, as the press releases were not misleading chthonian the applicable standards. The plaintiffs appeal these aspects of the district courts dismissal. We review de novo the district courts dismissal for failure to state a claim pursuant( proclaim) to Federal come up of Procedure hold 12(b)(6). ?Zimmerman v. City of Oakland, 255 F. 3d 734, 737 (9th Cir. 2001). DISCUSSION A.? Insider traffic As they pertain to insider maintenance, naval division 10(b), shape 10b-5, component 14(e) and tackle 14e-3 make it illegal in some circumstances for those possessing inside information about a company to trade in that companys securities unless they first observe the information. suck in, e. g. , United States v. Smith, 155 F. 3d 1051, 1063-64 (9th Cir. 998). ? This sign of prohibition is known as an â€Å"desist or disclose” rule, because it requires insiders every to quit from duty or to disclose the inside information that they possess. The district court discount the insider duty claims, holding that the named plaintiffs could not assert them because they did not trade modern-dayly with THC. On appeal, Brody and Crawford argue that nothing in the applicable securities laws requires investor s to put up traded synchronicly with insiders in order to maintain a suit for insider occupation. In addition, they argue that even if much(prenominal)(prenominal) a fatality exists, they in fact did trade contemporaneously with THC. 1.? naval division 10(b) and encounter 10b-5 incomplete parting 10(b)1 nor figure 10b-52 contain an express correctly of action for mystic parties. ? The dictatorial Court has held, however, that proper plaintiffs whitethorn sue for damages for violation of the statute and rule. ? look on Superintendent of Ins. v. Bankers Life and Cas. Co. , 404 U. S. 6, 13 n. 9, 92 S. Ct. 165, 30 L. Ed. 2d 128 (1971). Because n each the statute nor the rule contains an express decently of action, they in like manner do not delineate who is a proper plaintiff. ? In the absence of expressed Congressional guidance, courts have developed mixed â€Å" stand up” snareations, primarily on polity bases. 3 For example, in Blue chipping Stamps v. M anor Drug Stores, 421 U. S. 723, 95 S. Ct. 1917, 44 L. Ed. 2d 539 (1975), the dogmatic Court held that to dally an insider calling claim beneath approach pattern 10b-5, a plaintiff must have traded in the same stock or other securities as the insider trader. The contemporaneous job requirement, at issue in this case, is another judicially-created standing requirement, specifying that to bring an insider art claim, the plaintiff must have traded in a companys stock at about the same time as the alleged insider. ?In Neubronner v. Milken, 6 F. 3d 666, 669 (9th Cir. 1993), the Ninth Circuit follow a contemporaneous art requirement for Section 10(b) and rein 10b-5 actions. ? train also In re Worlds of admire Sec. Litig. , 35 F. 3d 1407, 1427 (9th Cir. 1994). Neubronner explained that two reasons breathing this rule: First, â€Å"noncontemporaneous traders do not require the entertainion of the ‘disclose or come to an end’ rule because they do not become the disadvantage of trading with someone who has superscript access to information. ” ? 6 F. 3d at 669-70 (quoting Wilson v. Comtech Telecommunications Corp. , 648 F. 2d 88, 94 95 (2d Cir. 1981)). ? Second, the contemporaneous trading requirement puts reasonable limits on Section 10(b) and observe 10b-5s reach; without much(prenominal) a limitation, an insider defendant could be liable to a very magnanimous number of parties. Id. at 670. Brody and Crawford offer two reasons why the contemporaneous trading rule take in Neubronner should not here apply. ? First, they argue that the rule does not make sense, as a matter of statutory variation. ? In other words, they request that we declare that Neubronners interpretation of Section 10(b) and regularization 10b-5 was incorrect. ? Although the decision in Neubronner is not beyond debate, we do not consider the question further, as a Ninth Circuit panel may not overrule a earlier Ninth Circuit decision. ?Hart v. Massanari, 266 F. 3d 1155, 1171 (9th Cir. 2001).Brody and Crawford attempt to avoid this precedential bar by claiming that Neubronners implementation of the contemporaneous rule was dictum, and therefore not binding on us. ? It was not. ?Neubronner explicitly described its ruling regarding the contemporaneous trading requirement as a â€Å"holding. ” ? 6 F. 3d at 670. ? In addition, the determination was a demand predicate for the cases ultimate conclusion that contemporaneous trading must be pleaded with particularity. ? Id. at 673. Brody and Crawfords number submission in avoidance of Neubronner is that United States v. OHagan, 521 U. S. 642, 117 S. Ct. 2199, 138 L.Ed. 2d 724 (1997), overruled Neubronner. ? That assertion is simply wrong. ? OHagan, which was a criminal case, addressed neither the contemporaneous trading requirement in private actions nor any other standing rule. ? Instead, by approving of an expansive concept of who qualifies as an insider nether Section 10(b), the i mperious Court in OHagan clarified that more defendants may be liable beneath Section 10(b) than some courts have previously thought. ? Id. at 650, 117 S. Ct. 2199. ? In so doing, the Supreme Court did not veer preexist notions concerning whom insiders harm when they trade based on privilege information. Brody and Crawford next argue that even if the Section 10(b) and radiation pattern 10b-5 contemporaneous trading requirements remain, the court should define contemporaneous trades as trades that take place at bottom six months of one another. ? Under this definition, Brody and Crawford would have standing, as they sold their stock just nether two months after they allege THC bought the large block of stock in February. [3]? In Neubronner, this court did not decide the space of the contemporaneous trading effect for insider trading violations on a lower floor Section 10(b) and obtain 10b-5, 6 F. d at 670, nor has this court decided the question since. ? Because the two-mo nth time period presented by the facts of this case exceeds any possible portrayal of a contemporaneous trading period, it is not needed in this case either to define the exact contours of the period. ? We simply discover that a contemporaneous trading period of two months would gut the contemporaneous trading rules premise-that there is a inquire to carry out plaintiffs who could not possibly have traded with the insider, given the manner in which public trades are transacted. 2.?Section 14(e) and come up 14e-3 Brody and Crawford also argue that the district court erred in dismissing their claims at a lower place Section 14(e)4 and blueprint 14e-35 by holding that insider trading actions brought chthonic Section 14(e) and draw rein 14e-3 must also comprise to a contemporaneous trading requirement. ? In make this argument, the plaintiffs urge that we hold for them on two matters of first impression: (1) whether a private right of action exists on a lower floor radiat ion diagram 14e-3; and (2) if a private right of action does exist, whether it contains a contemporaneous standing requirement. We can assume, without deciding, that a private right of action exists below run 14e-3, for we watch no reason why the same contemporaneous trading rule that applies under Rule 10b-5 would not apply in such an action. ?As noted, this court has definitively adopt a contemporaneous trading requirement under Rule 10b-5. ? Although Rule 14e-3 differs in some respects from Rule 10b-5, (and was adopted in order to plug some holes the SEC perceived in Rule 10b-5),6 its core, like the core of Rule 10b-5, is an â€Å"desist or disclose” requirement. And, as is true of the â€Å"abstain or disclose” requirement of Rule 10b-5, the homogeneous requirement of Rule 14e-3 is intentional to prevent the disadvantage that inheres in trading with an insider with superior access to information. ?45 Fed. Reg. 60411-12 (1980). ? So we would have to have some excellent reason to adopt a several(predicate) standing rule under Rule 14e 3 from the one we use under Rule 10b-5. ? We are convince that there is no understructure for move such a distinction. The best prognosis appellants have advanced as a basis for differentiating the standing requirement under the two Rules is Plaine v. McCabe, 797 F. d 713 (9th Cir. 1986). ?Plaine held that a plaintiff suing under Section 14(e) need not have traded at all, let solely contemporaneously. ? Id. at 718. The fulcrum of Plaine was a distinction suggested by genus Piper v. Chris-Craft Indus. , Inc. , 430 U. S. 1, 38-39, 97 S. Ct. 926, 51 L. Ed. 2d 124 (1977), amongst the types of shareholder hold dearions contained in Sections 10(b) and 14(e): Piper noted that while Section 10(b) was enacted to protect only individuals who demonstrablely traded in stocks, Section 14(e) can be understood as protecting not only those who buy or sell stocks but also shareholders who decide not to trade. 430 U. S. at 38-39, 97 S. Ct. 926. ? Because Rule 14e-3 was promulgated under Section 14(e), the argument that a plaintiff who alleges insider trading under Section 14(e) or Rule 14e-3 need not worry about the contemporaneous trading requirement-because he need not have traded at all-has some sign plausibility. On a close set(predicate) examination, however, Plaine does not speak to the issue at hand. Rather, Plaine focused only on non-insider trading claims brought under Section 14(e), and did not consider the standing requirements for an insider trading claim brought under Rule 14e-3. Section 14(e) broadly prohibits â€Å"fraudulent, deceptive, or manipulative acts or practices, in continuative with any postage stamp offer;” it does not contain any specific refer to insider trading. ? Rule 14e-3, on the other hand, focuses on one type of behavior, insider trading, whose prohibition is thought to prevent fraudulent, deceptive, or manipulative acts. ? con OHagan, 521 U. S. a t 672-73, 117 S. Ct. 2199. ? In accordance with its specific, safety focus, Rule 14e-3 applies to a different set of behaviors than does Section 14(e): Section 14(e) centers on the actual doting offer, whereas Rule 14e-3 regulates illegal insider trading that takes place while a offer up offer is under consideration. ? As appellants drawing states, â€Å"[a]ll the elements of a Section 14(e)/Rule 14e-3 insider trading violation are supplied by the spoken communication of Rule 14e-3. A comparison of the facts in Plaine with the facts in this case illustrates the difference between the Section 14(e) claim considered in Plaine and the Rule 14e-3 claim considered here. ? Plaine held shares in a company subject to a cutter offer. ? She complained that assumed information in proxy materials had induce other shareholders to tenderize their shares. ? Because so many other shareholders tendered their shares, the merger went through at a price Plaine viewed as inadequate. Although Pl aine did not tender her shares, the court ruled that she alleged injury occurring as a result of fraudulent activity in federation with a tender offer and had standing to assert her claim. ?797 F. 2d at 717. ? Plaine did not, however, allege insider trading, and therefore could not have do out a claim under Rule 14e-3. Brody and Crawford, on the other hand, did allege insider trading but did not allege that THC manipulated the tender offer process through the use of false information or by any other means. ? As such, the facts in the current case present a very different situation than that presented in Plaine. The circumstances do, however, take on a much closer affinity to those in Neubronner, a Rule 10b-5 case centering around accusations of insider trading in violation of an abstain-or-disclose requirement. ? chequer Neubronner, 6 F. 3d at 667. Despite the similarities of the issues here and in Neubronner and between Rules 10b-5 and 14e-3, as applied to insider trading alle gements, Brody and Crawford emphasize the differences between the Rules. ? Unlike Rule 10b-5, Rule 14e-3 does not require substantiation that a person traded on information obtained in violation of a duty owed to the source of the inside information. Instead, Rule 14e-3(a) creates a duty for a person with inside information to abstain or disclose â€Å"without regard to whether the trader owes a pre-existing fiduciary duty to respect the confidentiality of the information. ” ? OHagan, 521 U. S. at 669, 117 S. Ct. 2199 (quoting United States v. Chestman, 947 F. 2d 551, 557 (2d Cir. 1991) (en banc)). ? Although Rule 14e-3 frankincense expands the notion of who is an insider, it does not follow that the Rule also expands the class of shareholders who may complain when an insider trades without disclosing insider information. As a result, the fact that Rule 10b-5 and Rule 14e-3 are not akin does not lead to the conclusion that one has a contemporaneous trading requirement and t he other does not. More importantly, perhaps, in this case, the allegation is that THC traded in its own stock on the basis of inside information. ? such(prenominal) allegations would state a â€Å"…‘traditional’ or ‘classical’ theory of insider trading liability [under] Rule 10b-5 based on ‘a relationship of trust and confidence between the shareholders of a corporation and those insiders who have obtained information by reason of their position with that corporation. …” ? OHagan, 521 U. S. at 651-652, 117 S. Ct. 2199 (quoting Chiarella, 445 U. S. at 228, 100 S. Ct. 1108). ? As such, this case is one that could be-and indeed, was-brought under both Rule 10b-5 and Rule 14e-3, and as to which any differences between the two rules regarding the necessary relationship between the insider and the source of information is not germane(predicate). Brody and Crawford note another reason that, they argue, suggests an expansive rendering o f Rule 14e-3 is appropriate. In OHagan, the Supreme Court ruled that the SEC is permitted to promulgate rules under Section 14(e), such as Rule 14e-3, that prohibit acts not themselves fraudulent under the common law if the rules are slightly intentional to prevent acts that are. ?521 U. S. at 671-73, 117 S. Ct. 2199. ? This government agency derives from the prophylactic rule-making supply granted to the SEC by Section 14(e), a power that has no parallel in Section 10(b). ?Id.That the SEC had more power to protect investors when it promulgated Rule 14e-3 than it did when it promulgated Rule 10b-5 does not mean, however, that the SEC exercised that power so as to protect noncontemporaneous traders under Rule 14e-3. ? And, in fact, what evidence there is demonstrates that the SEC did not intend to protect investors who could not have possibly traded with the insiders. In OHagan, the Supreme Court quoted at length from and afforded esteem to the SECs exposition of why it promulg ated Rule 14e-3. Part of the Federal Register move out quoted in OHagan stated: The Commission has previously expressed and continues to have serious concerns about trading by persons in pigheadedness of material, nonpublic information relating to a tender offer. ? This practice results in unfair disparities in market information and market disruption. ? aegis holders who purchase from or sell to such persons are effectively denied the benefits of disclosure and the of the essence(p) protections of the [legislation that includes Section 14(e)]. 21 U. S. at 674, 117 S. Ct. 2199 (quoting 45 Fed. Reg. 60412 (1980)). This quotation evinces a particular concern for those who â€Å"purchase from or sell to” insiders, and suggests that these shareholders, and not others who trade later, are the intended beneficiaries of Rule 14e-3. ? The contemporaneous trading requirement, designed to limit the class of potential plaintiffs to only those who could have possibly traded with the insider, is therefore precisely congruent with the SECs expressed purpose in promulgating Rule 14e-3.In sum, Rule 10b-5 and Rule 14e-3 contain similar insider trading prohibitions, triggered by similar concerns. ? plot Rule 14e-3 focuses on the tender offer context, the background history and language of Rule 14e-3 indicate that the Rule does not alter the premise that a shareholder must have traded with an insider or have traded at about the same time as an insider to be harmed by the insiders trading. ? We conclude that there is no principled distinction between Rules 10b-5 and 14e-3 as regards the need for a contemporaneous trading allegation.We therefore extend the contemporaneous trading requirement to insider trading actions brought under Section 14(e) and Rule 14e-3 actions. ? Because Brody and Crawford traded roughly two months after they allege THC traded, they did not trade contemporaneously with THC. The district court was correct in dismissing their Rule 14e-3 insider trading claims. B.? Misrepresentation We next consider a different set of concerns addressed by the securities laws: Rule 10b-5 and Section 14(e)s explicit prohibition against the making of imitation or misleading avouchments. The plaintiffs do not maintain that either press release issued by THC was untrue. ? They do argue, though, that THC violated the prohibitions against making misleading statements when it issued the two press releases here at issue. ? In order to outlast a motion to dismiss under the heightened be sympathizeching standards of the Private Securities Litigation shed light on Act (â€Å"PSLRA”), the plaintiffs complaint must specify the reason or reasons why the statements made by THC were misleading. ?15 U. S. C. §? 78u-4(b) (1); see also Ronconi, 253 F. 3d at 429.As an initial matter, Brody and Crawford correctly assert that a statement that is literally true can be misleading and thus actionable under the securities laws. ? enamour In re GlenFed Sec. Litig. , 42 F. 3d 1541, 1551 (9th Cir. 1994). ? But they err when they argue that in order for a statement not to be misleading, â€Å"once a disclosure is made, there is a duty to make it complete and accurate. ” This proposition has no support in the case law. ?Rule 10b-5 and Section 14(e) in terms prohibit only misleading and untrue statements, not statements that are incomplete.Similarly, the primary case upon which Brody and Crawford bank for their innovative completeness rule supports only a rule requiring that parties not mislead. ? Virginia Bankshares, Inc. v. Sandberg, 501 U. S. 1083, 1098 n. 7, 111 S. Ct. 2749, 115 L. Ed. 2d 929 (1991). ? Often, a statement will not mislead even if it is incomplete or does not include all germane(predicate) facts. 8 ? Further, a completeness rule such as Brody and Crawford suggest could implicate nearly all public statements potentially change securities sales or tender offers. No matter how critical and accurate disclosur e statements are, there are likely to be additional details that could have been let out but were not. ? To be actionable under the securities laws, an omission must be misleading; in other words it must affirmatively create an impression of a state of affairs that differs in a material way from the one that actually exists. ? See McCormick v. The Fund American Cos. , 26 F. 3d 869, 880 (9th Cir. 1994).We conclude that neither Rule 10b-5 nor Section 14(e) contains a freestanding completeness requirement; the requirement is that any public statements companies make that could meet auspices sales or tender offers not be misleading or untrue. ? Thus, in order to survive a motion to dismiss under the heightened pleading standards of the Private Securities Litigation Reform Act (â€Å"PSLRA”), the plaintiffs complaint must specify the reason or reasons why the statements made by THC were misleading or untrue, not simply why the statements were incomplete. 15 U. S. C. §? 78u-4 (b) (1); see also Ronconi, 253 F. 3d at 429. ?Brody and Crawfords allegations do not comport with this requirement. ? They allege, first, that the press release issued on March 19 was misleading because it countenanced information about THCs stock repurchase program but did not contain information regarding THCs possible takeover. ? Although Brody and Crawford specify what information THC omitted, they do not indicate why the statement THC made was misleading. ? If the press elease had affirmatively intimated that no merger was imminent, it may well have been misleading. ? The actual press release, however, neither stated nor implied anything regarding a merger. ?Brody and Crawford also claim that THCs second press release, issued on April 24, was misleading. ? Again, the plaintiffs do not argue that the press release was untrue. ? Instead, they argue that it was misleading because it stated generally that THC had received â€Å"expressions of interest” from potential acquir ers, when in fact it had received actual proposals from three different parties. Importantly, the complaint does not provide an explanation as to why this general statement was misleading, nor is it axiomatic that it was. A proposal is certainly an â€Å"expression of interest. ” ? Moreover, the press release did not simply state that there had been vague â€Å"expressions of interest;” it went on to state that the â€Å"expressions” were â€Å"from certain parties who have indicated an interest in acquiring either the entire company or in acquiring the company, with the companys shareholders retaining their pro rata interests in behavioral Healthcare Corporation [a THC subsidiary]. ? This specificity concerning the character of the parties proposals certainly suggests that something more than preliminary inquiries had taken place. Further, the press release additionally stated that the â€Å"Board of Directors has engaged financial advisors to advise the c ompany in corporation with a possible sale. ” ? This additional information again suggested proposals that were concrete enough to be taken seriously. ? And the reference to multiple parties contained in the press release suggests an ongoing auction for THC was taking place with at least two participants.In short, the press release did not give the impression that THC had not received actual proposals from three parties or otherwise mislead readers about the stage of the negotiations. ? Instead, although the press release did not provide all the information that THC have about its possible sale, the information THC did provide-and the reasonable inferences one could draw from that information-were entirely consistent with the more detailed explanation of the merger process that Brody and Crawford argue the press release should have included. Put another way, Brody, if he read the press release, would have been on notice, before he sold his shares, of the distinct possibilit y that the value of the shares would increase in the near future because of a takeover contest. 9 [11] Because Brody and Crawford have not alleged facts indicating that THCs April 24 press release was misleading, the district court properly pink-slipped that aspect of the plaintiffs complaint. CONCLUSION Brody and Crawford have not met the contemporaneous trading requirements necessary to have standing in the insider trading claims they assert. Additionally, they have failed properly to allege misrepresentation against THC. As a result, we affirm the district courts decision to dismiss Brody and Crawfords complaint for failure to state a claim upon which relief could be granted. AFFIRMED FOOTNOTES 1. ?Section 10, in relevant part, states: It shall be unlawful for any person, like a shot or in promptly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any installment of any national securities exchange-?.???.???.???.???. b)? To use or employ , in community with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based change agreement (as defined in section 206B of the Gramm-Leach-Bliley Act), any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. 2. Rule 10b-5 states: It shall be unlawful for any person, in a flash or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,(a)? To employ any device, scheme, or artifice to defraud,(b)? To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or(c)?To engage in any act, practice, or c ourse of business which go aways or would operate as a fraud or deceit upon any person, in connecter with the purchase or sale of any security. 3. ?These â€Å"standing” limitations are not, of course of the inbuilt variety, grounded in Article III of the Constitution, but simply delineate the oscilloscope of the implied cause of action. 4. ?Section 14(e) states: It shall be unlawful for any person to make any untrue statement of a material fact or omit to tate any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or to engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer or request or invitation for tenders, or any solicitation of security holders in foe to or in favor of any such offer, request, or invitation. ? The Commission shall, for the purposes of this subsection, by rules and regulations define, and prescribe means reaso nably designed to prevent, such acts and practices as are fraudulent, deceptive, or manipulative. . ?Rule 14e-3(a) states:(a)? If any person has taken a substantial step or steps to commence, or has commenced, a tender offer (the â€Å" religious offering person”), it shall patch up a fraudulent, deceptive or manipulative act or practice within the meaning of section 14(e) of the Act for any other person who is in self-denial of material information relating to such tender offer which information he knows or has reason to know is nonpublic and which he knows or has reason to know has been acquired directly or indirectly from:(1)? The offering person,(2)? The issuer of the securities sought-after(a) or to be sought by such tender offer, or(3)?Any officer, director, teammate or employee or any other person acting on behalf of the offering person or such issuer, to purchase or sell or cause to be purchased or sold any of such securities or any securities transformable into o r exchangeable for any such securities or any option or right to obtain or to tuck away of any of the foregoing securities, unless within a reasonable time prior to any purchase or sale such information and its source are publicly disclosed by press release or otherwise. 6. ?Chiarella v. United States, 445 U. S. 222, 100 S. Ct. 1108, 63 L. Ed. d 348 (1980), considered, but did not decide, the viability of a defalcation theory of liability under Rule 10b-5. ?445 U. S. at 235-37, 100 S. Ct. 1108. ?(A misappropriation theory extends liability to some parties who trade in a companys securities on the basis of confidential information but who have no special relationship with the companys shareholders. ) quest Chiarella, the SEC promulgated Rule 14e-3, which distinctly creates liability for insiders who trade in connection with a tender offer and do not disclose the inside information, irrespective of their relationship to the shareholders or the source of the information. past in 1 997, the Supreme Court decided OHagan, answering the question left forthright by Chiarella and deciding that Section 10(b) and Rule 10b-5 do create liability under a misappropriation theory. ?521 U. S. at 650, 117 S. Ct. 2199. ? The take is that Rules 10b-5 and 14e-3 largely overlap with regard to the scope of insider trader liability, although they differ in some respects not here pertinent. ? See p. 1004, infra. 7. As we discuss below, in OHagan the Supreme Court approved Rule 14e-3 as a prophylactic rule designed to prevent core violations of Section 14(e). ? See p. 1004, infra. 8. ?For example, if a company reports that its sales have risen from one year to the next, that statement is not misleading even though it does not include a detailed breakdown of the companys arena by region or month by month sales. 9. ?We note that Crawford sold his shares before the April 24 press release, so he could not have been influenced in his trading by the release. BERZON, Circuit Judge.\r\n '