Fed. Sec. L. Rep. P 98,664 Paul W. Zell v. Intercapital Income Securities, Inc., C. Fiumerfreddo, D. Greenwald and R. Long

Plaintiff, a shareholder in InterCapital Income Securities, Inc. (the Fund), brought this action on behalf of himself and other shareholders charging defendants violated various provisions of federal securities laws, including Section 14(a) of the Securities Ex change y&t of 1934 and Rule 14a-9, by failing fo disclose material information in two proxy statements. The statements solicited approval by the Fund’s shareholders of Investment Advisory Agreements with the Fund’s Investment Manager, Dean Witter InterCapital, Inc. (“DWI”) later renamed Dean Witter Reynolds InterCapital, Inc. The proxy statements failed to disclose a score of lawsuits charging violations of state and federal securities laws pending against the Dean Witter Organization (“DWO”), the parent of the Fund’s Investment Manager, and Dean Witter, Inc. (“DW”), the parent’s wholly-owned brokerage subsidiary.

The district court granted defendants’ motion for summary judgment on the ground that, as a matter of law, the omitted information was not material to stockholders in deciding whether to approve the proposed Investment Advisory Agreements with DWO’s subsidiary, DWI, the Investment Manager. We reverse and…