Walleye Trading LLC v. AbbVie Inc., No. 19-3063 (7th Cir. 2020)
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Wanting to repurchase outstanding shares. AbbVie began its auction at $114. Shareholders offered to sell at or below $114. AbbVie selected the lowest price that would allow it to purchase $7.5 billion of shares. AbbVie hired Computershare to receive all offers. At the end of bidding, AbbVie announced the preliminary result: it would purchase 71.4 million shares for $105 per share. AbbVie’s stock, which had been trading at roughly $100, closed at $103. An hour later, AbbVie announced that it had received corrected numbers from Computershare. Instead of purchasing 71.4 million shares at $105 a share, it would purchase 72.8 million shares at $103 a share. AbbVie’s share price fell to $99 the next day.
Walleye contends that AbbVie’s actions violated sections 10(b) and 14(e) of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b) and 78n(e). The Seventh Circuit affirmed the dismissal of Walleye’s complaint. A plaintiff bringing section 10(b) claims must plead the fraud with particularity and allegations of scienter must be as compelling as any opposing inference. Walleye has not pleaded that AbbVie made any statement that is false or misleading, much less a statement with the required mental state. AbbVie accurately reported Computershare’s preliminary numbers and was not required to verify third-party data before reporting. The end of the tender offer placed Walleye outside the zone of interests protected by section 14.
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