Chechele v. Sperling, No. 12-1769 (2d Cir. 2014)
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Plaintiff appealed the district court's grant of insider defendants' motion to dismiss her short-swing trading complaint. The court agreed with the district court that the requirements of a claim under section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78p(b), mandating disgorgement of short-swing profits by statutory insiders, had not been satisfied. The prepaid variable forward contracts in this case were properly analyzed under traditional, and not hybrid, derivative analysis. When that was done, it became evidence that no "purchase" occurred against which a "sale could be matched for section 16(b) purposes.
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12-1769-cv Chechele v. Sperling 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term 2012 4 5 6 (Argued: March 12, 2013 Decided: July 11, 2014) Docket No. 12-1769-cv -----------------------------------------------------x 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 DONNA ANN GABRIELE CHECHELE, 22 B e f o r e : Plaintiff-Appellant, -- v. JOHN G. SPERLING, PETER V. SPERLING, Defendants-Appellees, APOLLO GROUP, INC., Nominal Defendant-Appellee. -----------------------------------------------------x WALKER, WESLEY, and HALL, Circuit Judges. 23 Plaintiff-Appellant Donna Ann Gabriele Chechele appeals from 24 the judgment of the United States District Court for the Southern 25 District of New York (Paul A. Crotty, Judge) granting Defendants- 26 Appellees motion to dismiss. 27 found that the requirements of a claim under section 16(b) of the 28 Securities Exchange Act of 1934, mandating disgorgement of short- 29 swing profits by statutory insiders, had not been satisfied. 30 AFFIRMED. Specifically, the district court 31 1 12-1769-cv Chechele v. Sperling 1 2 3 4 5 6 7 8 9 10 JAMES A. HUNTER, Hunter & Kmiec, New York, NY, for Plaintiff-Appellant. DENNIS H. TRACEY, III (Nathaniel E. Marmon, on the brief), Hogan Lovells US LLP, New York, NY, for Defendants-Appellees. JOHN M. WALKER, JR., Circuit Judge: 11 Plaintiff-Appellant Donna Ann Gabriele Chechele appeals from 12 the judgment of the United States District Court for the Southern 13 District of New York (Paul A. Crotty, Judge) granting insider 14 Defendants-Appellees motion to dismiss her short-swing trading 15 complaint. Specifically, the district court found that the 16 requirements of a claim under section 16(b) of the Securities 17 Exchange Act of 1934 ( Exchange Act ), mandating disgorgement of 18 short-swing profits by statutory insiders, had not been satisfied. 19 We agree and affirm the district court s judgment. 20 BACKGROUND 21 Appellant Chechele is a shareholder of Apollo Group, Inc. 22 ( Apollo ). Appellees John and Peter Sperling, father and son, are 23 the Executive Chairman and Vice Chairman of Apollo s Board of 24 Directors, respectively. Chechele sued the Sperlings under section 25 16(b) of the Exchange Act, 15 U.S.C. § 78p(b), seeking disgorgement 26 of alleged short-swing profits. Short-swing profits are realized 27 under section 16(b) when an insider buys and sells stock of his 28 company within a six-month period. It is undisputed that the 29 Sperlings are insiders for the purposes of section 16(b). 2 12-1769-cv Chechele v. Sperling 1 As insiders, John and Peter Sperling had considerable holdings 2 of Apollo stock. In order to convert some of their shares of Apollo 3 Class A common stock into cash, in 2006 and 2007, John Sperling 4 entered into two prepaid variable forward contracts ( PVFCs ) and 5 Peter Sperling entered into three PVFCs. The terms of each PVFC 6 were contained in three documents: (1) a Master Agreement, (2) a 7 Pledge Agreement, and (3) a Transaction Confirmation. 8 The Master Agreements provided the general framework for the 9 PVFC transactions.1 On the Payment Date, the banks would pay John 10 and Peter an agreed-upon amount of cash. In exchange, the Sperlings 11 promised to deliver to the banks, on a pre-determined Settlement 12 Date, some number of Apollo shares, or their cash equivalent. The 13 number of shares to be delivered varied with the market closing 14 price of Apollo stock three days prior to the Settlement Date 15 according to a formula provided in each agreement. 16 Additionally, on the Payment Date, the Sperlings pledged as 17 collateral the maximum number of shares that could be delivered 18 under the agreement to secure the banks interest in the shares. 19 In the meantime, however, the Sperlings retained ownership of the 20 shares until delivery on the Settlement Date; they continued to 1 John and Peter Sperling each signed a master stock purchase agreement with Bank of America. Peter also signed an equivalent agreement with Deutsche Bank, labelled the forward purchase contract, which along with the master stock purchase agreements are collectively referred to as the Master Agreements. 3 12-1769-cv Chechele v. Sperling 1 have the right to exercise the shares voting rights and receive 2 cash dividends. 3 The particulars of each PVFC transaction, including the 4 Payment Date, upfront cash payment amount, number of pledged 5 shares, Settlement Date, and settlement formula, were all set forth 6 in the Transaction Confirmation. For example, John Sperling s July 7 11, 2007 Transaction Confirmation called for him to pledge one 8 million shares on July 16, 2007 (the Payment Date) in return for 9 approximately $52.4 million from Bank of America. The Settlement 10 Date occurred approximately eighteen months later, on January 12, 11 2009. 12 Under the settlement formula in this transaction, if the share 13 price three trading days prior to settlement (the Maturity Date ) 14 fell below $60.2235 (the floor price ), John was required to 15 deliver all of the pledged shares or a cash equivalent. The floor 16 price protected John from a decline in the stock price because he 17 was required to deliver one million shares (or the cash equivalent) 18 regardless of how much below the floor price the share price fell. 19 But if the share price at the Maturity Date was between the 20 floor price and $78.2906 (the ceiling price ), the number of 21 shares to be delivered would decline as the share price rose above 22 the floor price according to a formula that maintained a constant 23 cash equivalent value. John would keep any undelivered shares. 4 12-1769-cv Chechele v. Sperling 1 If the share price at the Maturity Date was above the ceiling 2 price, however, the number of shares to be delivered would increase 3 according to a formula under which John had to deliver more shares 4 as the stock price rose. But, no matter how high the stock price 5 climbed, John never had to deliver more than the one million 6 originally pledged shares.2 7 The transaction could be viewed as a bet on whether the share 8 price would be above the ceiling price (bank s bet) or below the 9 floor price (John s bet) on the Maturity Date. John would win the 10 bet if the settlement price was below the floor, because he would 11 be satisfying his obligation to the bank with relatively 12 inexpensive shares. The bank would win the bet if the settlement 13 price was above the ceiling, because it would receive an increasing 14 number of shares of increasing value. For settlement prices in 15 between the floor and ceiling, the transaction resembled a loan; 16 John borrowed $52.4 million from the bank on the Payment Date and 17 was obligated to pay the bank back approximately $62 million (the 18 $52.4 million he borrowed plus the implied financing cost of the 19 loan). 2 We have represented this PVFC s formula graphically at the end of this opinion. As one can see, the value John delivered to the bank rises steadily as the share price rises, until it reaches the floor price. The value then remains constant, until the share price reaches ceiling price, at which point the value delivered rises again. 5 12-1769-cv Chechele v. Sperling 1 On January 9, 2009, the share price was $85.3300 above the 2 ceiling so the bank won the bet and John had to deliver some, but 3 not all, of the pledged shares on January 12. 4 All five PVFC transactions were settled by delivery of shares 5 rather than the cash equivalent. The following charts summarize 6 their terms. 7 John Sperling Trade Date 7/11/07 Maturity Date 1/9/09 Pledged Shares 1,000,000 Floor Price 60.2235 Ceiling Price 78.2906 Settlement Price 85.3300 Delivered Shares 788,300 Undelivered Shares 211,700 4/24/06 4/24/09 500,000 53.3780 80.0670 61.1450 436,500 63,500 8 9 Peter Sperling Trade Date 7/11/07 Maturity Date 1/9/09 Pledged Shares 1,000,000 Floor Price 60.2235 Ceiling Price 78.2906 Settlement Price 85.3300 Delivered Shares 788,300 Undelivered Shares 211,700 4/24/06 4/24/09 500,000 53.3780 80.0670 61.1450 436,500 63,500 1/19/06 1/20/09 315,000 55.3064 71.8983 86.5400 254,606 60,394 10 11 12 THE CLAIM IN THE DISTRICT COURT Within six months of the settlement of the PVFC transactions 13 at issue, the Sperlings sold some of their Apollo stock on the open 14 market. Chechele alleges that those sales, in light of the PVFC 15 settlement, violated section 16(b). According to her theory of the 16 case, the Sperlings sold the shares they pledged to the banks on 17 the Payment Dates of the PVFCs, but then repurchased the 18 undelivered shares on the Settlement Dates. She claims that their 19 subsequent sales of company stock on the open market less than 6 12-1769-cv Chechele v. Sperling 1 six months after the PVFC s settled - can be matched to the 2 purchase that occurred at settlement. If she is correct, any 3 profits made from the later sales must be disgorged as short-swing 4 profits under section 16(b). 5 The district court concluded that because the Sperlings 6 rights became fixed and irrevocable at the time they entered into 7 the [PVFCs] . . . the repurchases of the [Sperlings ] retained 8 shares on the settlement date did not constitute a purchase under 9 Section 16(b). Chechele v. Sperling, No. 11 Civ. 0146, 2012 WL 10 11 12 1038653, at *5 (S.D.N.Y. Mar. 29, 2012). DISCUSSION Chechele raises only one issue on appeal: whether the 13 Sperlings retention of a portion of the shares that were pledged 14 but not delivered to the banks constituted a purchase of company 15 stock within the meaning of section 16(b) of the Securities 16 Exchange Act. We review de novo the district court s grant of a 17 motion to dismiss under Federal Rule of Procedure 12(b)(6), 18 Anschutz Corp. v. Merrill Lynch & Co., 690 F.3d 98, 107 (2d Cir. 19 2012), and conclude that the Sperlings ultimate retention of 20 shares pledged to the banks in the various PVFC transactions did 21 not constitute purchases under section 16(b). 22 23 24 25 26 In relevant part, section 16(b) states: [A]ny profit realized by [a corporate insider] from any purchase and sale, or any sale and purchase, of any equity security. . . within any period of less than six months . . . shall 7 12-1769-cv Chechele v. Sperling 1 2 3 4 5 15 U.S.C. § 78p(b). We have explained that liability under Section 6 16(b) does not attach unless the plaintiff proves that there was 7 (1) a purchase and (2) a sale of securities (3) by an [insider] 8 (4) within a six-month period. Gwozdzinsky v. Zell/Chilmark Fund, 9 L.P., 156 F.3d 305, 308 (2d Cir. 1998).3 The only element at issue 10 here is element one: whether a purchase occurred when the PVFCs 11 settled and the Sperlings retained some of their pledged shares.4 inure to and be recoverable by the issuer, irrespective of any intention on the part of [the insider]. 12 13 A. PVFCs are a form of complex derivatives 14 The PVFCs at issue here are complex derivatives.5 On the day 15 the contracts were written, the Sperlings obtained the equivalent 16 of a right to sell a maximum number of shares to the banks, which 17 they would exercise if the share price fell below a floor. Because 18 the value of the Sperlings right to sell shares would increase as 3 For the purposes of section 16(b) an insider is an officer or director of the issuer or . . . a shareholder who owns more than ten percent of any one class of the issuer s securities[.] Gwozdzinsky, 156 F.3d at 308. 4 We and the parties refer to the transactions here as PVFCs. This label is useful as far as this transaction goes. We must be cautious, however, not to rely too heavily on labels because the creativity of Wall Street lawyers and bankers is boundless. A future instrument that resembles today s PVFC may contain a heretofore unthought-of contractual term that fundamentally changes the analysis. 5 Derivatives include, among other things, options to buy or sell securities at particular prices in the future. 17 C.F.R. § 240.16a 1(c). 8 12-1769-cv Chechele v. Sperling 1 the price of the stock decreased, the right is a put equivalent 2 position. 17 C.F.R. § 240.16a-1(h).6 In exchange for this put 3 equivalent position, the Sperlings granted the banks a right to 4 receive additional shares as the Apollo stock price rose above the 5 PVFC ceiling price. 6 receive the pledged shares would increase as the stock price 7 increased, the right is a call equivalent position. 17 C.F.R. § 8 240.16a-1(b).7 9 Because the value of the banks right to For purposes of our analysis, the initial pledge of shares as 10 collateral is irrelevant; the pledge agreement merely protected the 11 bank against the sale or encumbrance of the shares at risk in the 12 PVFC until the settlement date. And the fact that the transaction 6 A put option is a contract giving one party the right to sell, and obligating one party to buy, a stock or commodity at a given price, known as a strike price, on a particular date. If the market price on that date is below the strike price, then the option becomes valuable because one could purchase the stock in the market and immediately resell it for a profit. See Michael S. Knoll, Put-Call Parity and the Law, 24 Cardozo L. Rev. 61, 70 (2002). We are further convinced that this transaction was a put equivalent by the fact that the potential loss to the bank here if the transaction settled below the floor, and the potential loss to the writer of a traditional put option are nearly identical. Intrigued readers are encouraged to compare our graph of this transaction with Knoll s profit/loss graph of a put option. Id. 7 A call option is a standardized contract giving one party the right to buy, and obligating one party to sell, a stock or commodity at a given price, again a strike price, on a particular date. If the market price of the stock rises above the strike price, the option becomes valuable because one could exercise the option and immediately sell the purchased shares on the open market at a profit. See Knoll, supra, at 70. Again, comparing our graph of the profit to the bank if this transaction settled above the ceiling with a graph of the profit to the holder of a traditional call option reveals just how much like a call option this transaction was. See id. 9 12-1769-cv Chechele v. Sperling 1 resembled a loan at settlement prices between the floor and the 2 ceiling is also irrelevant. Even though no shares changed hands on 3 the Payment Date, rights to an equity security were still bought 4 and sold at the time of the contract.8 5 Were we to confine our focus to the loan aspects of the PVFC, 6 to the exclusion of its option-equivalent elements, we would not 7 only contravene the SEC rules, but also create a new vehicle for 8 insider trading. Suppose an insider anticipated a temporary dip in 9 his company s stock price. The insider could enter into a PVFC with 10 a settlement date during the expected price dip. The insider could 11 then settle in cash, paying the price of the now devalued shares, 12 but retaining the shares themselves for the anticipated upswing in 13 the stock price. When the stock price returned to normal, the 14 insider would have kept his shares and profited by the difference 15 between the up-front payment (based on the normal stock value) and 16 the settlement price (based on the stock value during the market 8 Furthermore, the view that PVFCs are derivatives not loans is consistent with every authority revealed by research. First, the SEC treats PVFCs as derivatives. See Exchange Act Release No. 47809, 68 Fed. Reg. 25,788, 25,789 (May 13, 2003) ( In particular, section 16(a) requires insiders to report all securitybased swap agreements and transactions involving derivative securities, including . . . forwards . . . . ). Second, two separate district courts have now analyzed PVFCs as derivatives. See Chechele, 2012 WL 1038653; Donoghue v. Centillium Commc ns Inc., No. 05 Civ. 4082, 2006 WL 775122 (S.D.N.Y. Mar. 28, 2006). Moreover, leading treatises treat PVFCs as derivatives with potential insider-trading implications. See Peter J. Romeo & Alan L. Dye, Section 16 Treatise and Reporting Guide §§ 3.03[2][h], 10.05[3] (4th ed. 2012). Finally, both parties to this litigation go to great lengths to analyze the contracts as transactions in derivative securities. 10 12-1769-cv Chechele v. Sperling 1 dip). 2 In this hypothetical, if the PVFC is treated as a loan, 3 section 16(b) was not violated. No shares changed hands, and there 4 was no purchase or sale to trigger section 16(b). Viewing the 5 PVFC as a derivative, however, the potential for abuse becomes 6 clear: the insider offered the PVFC call option as consideration 7 for the put option, knowing that the call option would never be 8 exercised. In other words, he used his informational advantage to 9 sell something he knew to be worthless. 10 Precisely to prevent what would happen in our hypothetical, we 11 have held that for purposes of Section 16(b), the expiration of a 12 call option within six months of its writing is to be deemed a 13 purchase by the option writer to be matched against the sale 14 deemed to occur when that option was written. Roth v. Goldman 15 Sachs Grp., Inc., 740 F.3d 865, 872 (2d Cir. 2014); see also 17 16 C.F.R. § 240.16b-6(d). This rule prevents an insider from profiting 17 by selling call options with expiration dates within six months, 18 while knowing, by virtue of his inside information, that the stock 19 price would not rise above the strike price and the option would 20 never be exercised. We think this rule should apply here as well. 21 We therefore hold that a PVFC is akin to the sale of a call 22 option (and purchase of a put) by the insider, and this sale should 23 be matched to a purchase at the settlement date, should the call 24 option expire. Thus for purposes of section 16 liability, the 11 12-1769-cv Chechele v. Sperling 1 Sperlings sold call options to the banks on the day they signed 2 the contract, and any matching purchases would occur if at all 3 on the settlement date if these options went unexercised. 4 Viewing the instant transactions in this manner, it becomes 5 clear why the Sperlings did not violate section 16(b). First, for 6 the transactions that settled above the ceiling, nothing of 7 significance occurred on the settlement date. The bank merely 8 exercised its call options, which is neither a purchase nor a sale 9 under section 16(b). The exercise of a traditional derivative 10 security (as opposed to its expiration) is a non-event for 11 section 16(b) purposes. Magma Power Co. v. Dow Chem. Co., 136 F.3d 12 316, 322 (2d Cir. 1998). Second, even if the banks call options 13 had expired - as they did in several cases the expiration of an 14 option can only be matched to its own writing for section 16 15 purposes, not to another unrelated sale of stock. Allaire Corp. v. 16 Okumus, 433 F.3d 248, 254 (2d Cir. 2006). Since the Sperlings 17 subsequent stock purchases were not part of the PFVC derivative 18 transaction, the two could never have been matched. 19 B. PVFCs are not hybrid deriviatives 20 Although Chechele would agree with our conclusion that the 21 PVFCs at issue here are a species of derivative, she attempts to 22 analyze these contracts under our emerging hybrid derivatives 23 case law governing options without a fixed exercise price. This is 24 the incorrect mode of analysis. 12 12-1769-cv Chechele v. Sperling 1 In Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 2 36, 49-50 (2d Cir. 2012), we held that a hybrid derivative a 3 derivative without a fixed exercise price is not purchased 4 until the price becomes fixed because only then is the extent of 5 the profit opportunity defined[.] 9 Our hybrid derivative cases, 6 however, have all dealt with contracts where one of the parties 7 controlled the timing, and thus the price, at which the option 8 would be exercised. See Analytical Surveys, 684 F.3d at 41; At Home 9 Corp. v. Cox Commc ns Inc., 446 F.3d 403, 405 (2d Cir. 2006); Magma 10 Power, 136 F.3d at 319. This is critical. 11 Because one of the parties controls the timing of the 12 exercise, hybrids present two opportunities to use inside 13 information, once at the writing of the contract and again at their 14 exercise. In Analytical Surveys, we emphasized that the insider s 15 additional opportunity to rely on inside information to time the 16 date of exercise presented an additional danger. 684 F.3d at 50. 17 This is why we held that the purchase for section 16(b) purposes 18 occurs when the price is fixed. The time the price is fixed is when 19 the last opportunity to use inside information occurs, and when the 20 six-month clock for a matching sale should start. See id. at 49-50. 21 The PVFCs at issue here, however, do not present the same risk 22 of manipulation at the time of their settlement that hybrids do at 9 This is in keeping with SEC regulations, which exclude from the definition of a traditional derivative [r]ights with an exercise or conversion privilege at a price that is not fixed[.] 17 C.F.R. § 240.16a-1(c)(6). 13 12-1769-cv Chechele v. Sperling 1 the time of their exercise. It is true that with these PVFCs, as 2 with the securities in our hybrid cases, the number of shares that 3 may be called and the price of those shares is not known at the 4 time the contract is written. Nonetheless, with these PVFCs the 5 price was set by a predetermined formula. There is thus no 6 opportunity for additional manipulation after the contract is 7 signed.10 Because the parties are bound to the formula and dates 8 from the time of contracting, the prices of these PVFC options were 9 fixed at the time they entered the contract even if they are not 10 known. 11 Viewing these PVFCs as traditional rather than hybrid 12 derivatives also comports with SEC regulations. A related SEC rule 13 provides: 14 15 16 17 18 19 20 21 22 17 C.F.R. § 240.16b-6(a). The purpose of this regulation is to 23 avoid the unfairness of subjecting insiders to liability under [I]f [an insider s] increase or decrease [in a derivative position] occurs as a result of the fixing of the exercise price of a right initially issued without a fixed price, where the date the price is fixed is not known in advance and is outside the control of the recipient, the increase or decrease shall be exempt from section 16(b)[.] 10 As one district court put it, insiders writing PVFCs are powerless to manipulate the settlement [to their] advantage. [They are] obligated to settle [on the contractual date], regardless of whether the stock price [is] favorable . . . . While the ultimate number of shares to be transferred [is] not [known], that number [is] dictated by financial formulae and criteria set forth in the [PVFC] and, . . . [can]not be modified[.] Donoghue, 2006 WL 775122, at *5 (internal quotation marks omitted). 14 12-1769-cv Chechele v. Sperling 1 Section 16(b) who engage in a purchase or sale and then have an 2 offsetting sale or purchase thrust upon them thereafter by events 3 not known in advance and outside the[ir] control. Magma Power, 4 136 F.3d at 322. 5 Still, because there is some risk of manipulation, as we 6 discussed above, PVFCs do not and should not get the benefit of 7 a total section 16(b) exemption. Nonetheless, treating PVFCs as 8 hybrid derivatives could produce the same unfairness that 9 prompted the issuance of 17 C.F.R. § 240.16b-6(a). If the 10 purchase or sale of the derivative does not occur until the 11 price is fixed in the sense of being determined, every PVFC could 12 subject the insider to section 16(b) liability. This is because 13 under a hybrid derivative analysis a sale will always occur 14 shortly before settlement, when the value to be delivered is 15 determined. Because, under Roth, an expiration of the bank s call 16 option is a purchase (by the insider) to be matched with this 17 sale, section 16 liability would result whenever a PVFC settles 18 below the floor and the bank s call option expires. This does not 19 make sense. 20 Viewing the PVFCs as traditional derivatives, however, avoids 21 this odd result. The transactions to be matched are not the 22 fixing of the price shortly before settlement and the settlement 23 itself, but the writing of the contract and the settlement. As long 15 12-1769-cv Chechele v. Sperling 1 as the settlement date is set at least six months out from the 2 contract date, there is no risk of any short-swing profit. 3 4 5 *** In short, the Sperlings did not violate section 16(b). First, 6 nothing of significance occurred on the Settlement Dates. The banks 7 simply exercised their call options, which is neither a purchase 8 nor a sale under section 16(b). The exercise of a traditional 9 derivative security is a non-event for section 16(b) purposes. 10 Magma Power, 136 F.3d at 322. Therefore the Sperlings subsequent 11 sale of stock after settlement did not trigger liability. Second, 12 even if the banks call options had expired, under SEC Rule 16b 13 6(a) the expiration of an option, when matched against any 14 transaction other than its own writing, is not [a transaction]. 15 Allaire Corp., 433 F.3d at 254. Furthermore, as mentioned earlier, 16 the expiration of the banks call options is deemed a purchase 17 by the option writer to be matched against the sale deemed to 18 occur when that option was written. Roth, 740 F.3d at 872. And 19 third, the PVFC transaction was a sale of stock; both the rights 20 the Sperlings granted and received are put equivalent positions 21 deemed to be sale[s] of the underlying securities for purposes of 22 section 16(b)[.] 17 C.F.R. § 240.16b-6(a). To trigger section 23 16(b) liability there must be both a purchase and a sale, not two 24 sales. See Roth, 740 F.3d at 870. 16 12-1769-cv Chechele v. Sperling 1 To sum up, the PVFCs in this case are properly analyzed under 2 traditional, and not hybrid, derivatives analysis. When that is 3 done, it becomes evident that no purchase occurred against which 4 a sale could be matched for section 16(b) purposes. 5 CONCLUSION 6 7 For the foregoing reasons, the district court s judgment is AFFIRMED. 8 Number of Shares Delivered 1200000 Number of Shares Delivered 1000000 800000 600000 400000 200000 $35.00 $37.00 $39.00 $41.00 $43.00 $45.00 $47.00 $49.00 $51.00 $53.00 $55.00 $57.00 $59.00 $61.00 $63.00 $65.00 $67.00 $69.00 $71.00 $73.00 $75.00 $77.00 $79.00 $81.00 $83.00 $85.00 $87.00 $89.00 $91.00 $93.00 $95.00 $97.00 $99.00 0 9 Share Price 17 $35.00 $37.00 $39.00 $41.00 $43.00 $45.00 $47.00 $49.00 $51.00 $53.00 $55.00 $57.00 $59.00 $61.00 $63.00 $65.00 $67.00 $69.00 $71.00 $73.00 $75.00 $77.00 $79.00 $81.00 $83.00 $85.00 $87.00 $89.00 $91.00 $93.00 $95.00 $97.00 $99.00 Value of Shares Delivered in Millions 12-1769-cv Chechele v. Sperling Value of Shares Delivered 85 80 75 70 65 60 55 50 45 40 1 Share Price 18
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