Fed. Sec. L. Rep. P 98,222 William M. McCormick v. The Fund American Companies, Inc., a Delaware Corporation

Opinion by Judge FLETCHER.

Plaintiff William M. McCormick appeals the dismissal of his claims on summary judgment. Between 1983 and 1989, McCormick was CEO of the Fireman’s Fund Insurance Company (FFIC), a wholly-owned subsidiary of defendant Fund American Companies (FAC). When McCormick resigned from FFIC, he owned approximately 500,000 performance shares and option shares in FAC. The vesting period for these securities ran through the end of 1991. McCormick sold all of his securities back to FAC in May 1990. At that time, FAC was involved in negotiations for the sale of FFIC to a large foreign insurer. Those discussions were ultimately fruitful, and as a result of the sale of FFIC, the market value of FAC shares nearly doubled.

Before the buyout of McCormick’s securities was completed, company officials told McCormick about the pending discussions with the foreign insurer, and about the likely increase in the value of FAC stock if the sale were made. After the sale, McCormick claimed that the officials had misrepresented or omitted many material facts. He brought suit against FAC under § 10(b) of the Securities Exchange Act of 1934, and also alleged various related state…