Fed. Sec. L. Rep. P 95,408 Charles E. Williams v. James N. Sinclair, Dan R. Carlson and Frank Yazzolino v. James N. Sinclair

Plaintiffs appeal from the dismissal with prejudice of their securities fraud actions. For the reasons stated below, we reverse and remand.

Data Pacific Corporation (Data Pacific) was incorporated in 1967 under Oregon law in order that it might enter the burgeoning field of data processing. Its stock was first offered and sold to the public in 1967.

Data Pacific made a second public offering of ' 467,631 of its shares in the spring of 1969. As an integral part of that offering Data Pacific issued a prospectus, which became effective on April 21, 1969. The prospectus included detailed financial statements and representations as to the status of the research and development projects of the corporation. In addition, the prospectus stated that Data Pacific had orders, approximating one million dollars, for a data collection machine identified as the DP-1000. All of the offered shares were purchased by the public.

By the terms of the public offer current shareholders were given the opportunity, through warrants, to purchase additional shares at a price of $5.00 per share. The balance of the shares were offered to the general public at a price of $5.60 per share. The…