X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

The full case caption appears at the end of this opinion.

I.

The facts of this case are undisputed. On February 1, 1996, Medtox Scientific, Inc. [FOOTNOTE 3] issued shares of preferred stock. The preferred stock was convertible to Medtox’s common stock, at the option of the holder, at a price equal to the average closing price of the common stock for the five trading days preceding the notice of conversion. The conversion right became exercisable on March 30, 1996. Morgan Capital purchased preferred stock in the offering. In a hypothetical conversion on the date of purchase, Morgan Capital would have received less than 10% of Medtox’s common stock. David and Alex Bistricer, officers and controlling principals of Morgan Capital’s operations, served on Medtox’s Board from July 1996 to June 1997.

On March 28, 1996, the price of Medtox common stock dropped to a point where, had Morgan Capital converted its preferred shares to common stock, it would have received more than 10% of the total common stock. As the value of Medtox’s common stock declined, the Bistricers made weekly phone calls to Medtox’s management to discuss the company’s affairs. Had Morgan Capital exercised its conversion right on any day between April 9 and May 1, it would have acquired more than 10% of Medtox’s common stock. On May 1, 1996, Morgan Capital converted all of its preferred stock and received more than 10% of the shares of Medtox’s common stock. In May and June of 1996, Morgan Capital sold some of its shares of common stock, realizing a profit of $576,785.80.

 
Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.

More From ALM

With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now
Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now
Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now
February 24, 2025 - February 26, 2025
Las Vegas, NV

This conference aims to help insurers and litigators better manage complex claims and litigation.


Learn More
March 24, 2025
New York, NY

Recognizing innovation in the legal technology sector for working on precedent-setting, game-changing projects and initiatives.


Learn More
March 24, 2025 - March 27, 2025
New York, NY

Legalweek New York explores Business and Regulatory Trends, Technology and Talent drivers impacting law firms.


Learn More

Winkler Kurtz, LLP, a Port Jefferson Station law firm, seeks a Matrimonial Associate Attorney to provide assistance and be involved in all a...


Apply Now ›

Radoslovich | Shapiro, PC is a law firm based in Sacramento, CA, offering comprehensive legal services to diverse businesses across Californ...


Apply Now ›

The insurance defense firm of Downs Ward Bender Herzog & Kintigh, P.A. located in Hunt Valley, MD is seeking Litigation Associates with ...


Apply Now ›