Foremost-McKesson, Inc. v. Provident Securities Company

PETITIONER: Foremost-McKesson, Inc.
RESPONDENT: Provident Securities Company
LOCATION: Congress

DOCKET NO.: 74-742
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 423 US 232 (1976)
ARGUED: Oct 07, 1975
DECIDED: Jan 13, 1976

ADVOCATES:
Morton Moskin -
Noble K. Gregory -

Facts of the case

Question

Media for Foremost-McKesson, Inc. v. Provident Securities Company

Audio Transcription for Oral Argument - October 07, 1975 in Foremost-McKesson, Inc. v. Provident Securities Company

Audio Transcription for Opinion Announcement - January 13, 1976 in Foremost-McKesson, Inc. v. Provident Securities Company

Warren E. Burger:

Mr. Justice Powell has an opinion to announce.

Lewis F. Powell, Jr.:

This case is here on writ of certiorari to the Court of Appeals for the Ninth Circuit.

Section 16 B of the Security Exchange Act of 1934 allows a corporation to recover profit, realized by an officer, director, beneficial owner of more than 10% of its shares, where that has been a purchase and the sale of its shares within a six months period.

We took this case to determine the meaning of an exemptive provision, which specifies that the statute does not cover any transaction where the beneficial owner was not such both at the time of the purchase and the sale of the shares involved.

As the facts of this case are too complex for oral summary, I will announce only our decision.

We conclude in view of the language of the exemptive provision, that a beneficial owner is accountable for profits in a purchase sale sequence, only if he was such an owner, before the purchase as well as, at the time of the sale.

As the respondent in this case was not a beneficial owner before the purchase.

The subsequent sale within six months, is not subject to section 16B.

The Court of Appeals was of the same view.

Accordingly we affirm this judgment.

Mr. justice White joins in all but part 4 c of a court's opinion.

Mr. Justice Stevens took no part in the consideration or decision of this case.