Campbell v. Transgenomic, Inc., No. 18-2198 (8th Cir. 2019)
Annotate this CaseA shareholder of Transgenomic filed a class action against former shareholders, alleging materially misleading statements and omissions in the proxy statement. The Eighth Circuit reversed the district court's ruling that any omissions or misstatements in the proxy statement were not materially misleading, and held that the district court improperly resolved the materiality of the omission as a matter of law. The court also held that issues regarding whether a revenue table was misleading were also questions for the trier of fact. Finally, plaintiff's section 20(a) of the Securities Exchange Act allegation was sufficiently pled. Accordingly, the court remanded for further proceedings.
Court Description: Benton, Author, with Beam and Erickson, Circuit Judges] Civil case - Securities Law. In a class action alleging defendants violated Section 14(a) and 20(a) of the Securities and Exchange Act and SEC Rule 14a-9 by disseminating a false and materially misleading proxy statement that failed to give Transgenomic shareholders an accurate financial picture of Precipio, the company with which it was merging, a reasonable investor may have viewed disclosure of Precipio's net income/loss as having significantly altered the total mix of information made availabile, and the district court erred in resolving the materiality of the omission as a matter of law; issues as to whether a "revenue table" was misleading were also questions for the trier of fact; further plaintiffs' Section 20(a) claim against Transgenomic's former CEO were sufficiently pleaded to state a claim to relief that was plausible on its fact, and the Section 20(a) claim should not have been dismissed.
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