Myron R. Stahl v. Gibraltar Financial Corporation

We consider whether a shareholder who receives false or misleading proxy statements must actually have cast his vote in reliance on them as a condition for bringing suit under section 14(a) of the Securities Exchange Act of 1934 and SEC Rule 14a-9.

Facts

Myron Stahl owned stock in Gibraltar Financial Corporation; he received an invitation to the company’s 1987 annual meeting together with a proxy statement soliciting votes on several proposals for those shareholders unable to attend. One of these was a proposed amendment to the company’s certificate of incorporation, purportedly in response to recent changes in Delaware law, that would insulate Gibraltar’s directors from monetary liability. In connection with this proposal, the board of directors represented that it was “not aware of any pending or threatened litigation which would be affected by the approval of [the indemnity amendment].” Joint Proxy Statement/Prospectus at 26.

Stahl sued the corporation in an attempt to forestall the vote at the annual meeting. He alleged that the proxy statement “fails to disclose the existence of certain facts known by management to be relevant to the advisability of [the indemnity…