IN A DECISION of first impression, the U.S. Court of Appeals for the Second Circuit ruled yesterday that no private damages remedy exists for violations of a federal securities law designed to inform investors about the possibility of a hostile corporate takeover. Writing for a unanimous panel, Judge Guido Calabresi held in Hallwood Realty Partners LP v. Gotham Partners LP, 01-7246, that a failure to comply with �13(d) of the Securities and Exchange Act did not give rise to a claim for money damages. Rather, the statute provides for injunctive relief only.
The law, which was passed in 1968 in response to a spate of hostile takeovers, requires any group that has acquired more than 5 percent of a company’s shares to file a 13D schedule with the company and various regulatory agencies disclosing the name of the group, its activities and its intentions.
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