US Court Clarifies: Shareholders Acting in Concert May Not Be a “Group”; Contrast with English Law “Concert Parties” Approach

September 16, 2011
Whether two or more shareholders have formed a group under Section 13(d) of the U.S. Securities Exchange Act of 1934 has always been a difficult—and well-litigated—question. Shareholder concern about unintentionally forming a group has chilled communications among large holders of shares in U.S. public companies. This update examines the recent U.S. Second Circuit Court of Appeals ruling in CSX Corp. v. The Children’s Investment Fund Mgmt., which provided some surprising, concrete guidance on what behavior causes shareholders to be a group.