Emory Law Journal


Jessica Pekins


The tender offer is a common method used by third parties to gain control of a company. Third parties will approach a company’s shareholders with the opportunity to sell their shares at a fixed price, the result being a change in ownership and control. A company’s top executives may be threatened by this change in ownership and want to recommend that the shareholders reject the offer. However, executives have a duty to act in accordance with the shareholders’ best interests. This may lead to a conflict between the shareholders’ interests and the executives’ interests. Section 14(e) of the Securities Exchange Act of 1934 is designed to ensure that tender offers are not alienated by these conflicts of interests faced by company executives, and to ensure that shareholders are given all accurate information material to the decision of whether to accept or reject the tender offer. This Comment analyzes and critiques how circuit courts have historically taken a scienter approach to Section 14(e) claims, largely due to the appealing comparison to Rule 10b-5 and its requirements.