Faber

MEMORANDUM **

Plaintiffs Robert Faber and Les Cahan sued Defendants Stephen Parent (“Parent”), Jerrie Gasch, Judith Parent, and Purnendu K. Rana Medhi for alleged violations of the Securities Exchange Act of 1934, and for breach of fiduciary duty, stemming from Parent’s takeover of GoldSpring, Inc. in December 2004. Plaintiffs primarily contend that Defendants violated Section 14(a) of the Act, 15 U.S.C. § 78n(a), by failing to file and disseminate a proxy statement before they removed GoldSpring’s board of directors. Defendants appeal from the district court’s decision granting Plaintiffs a preliminary injunction that restored the board to its original composition.

Parent served as GoldSpring’s chief executive officer until August 2004, when he resigned after allegations of self-dealing and other misconduct surfaced. Shortly thereafter, GoldSpring voted to approve a transaction with investors assembled by Merriman, Curhan & Ford (the “Merriman transaction”). The Merriman Investors agreed to convert $10 million worth of GoldSpring stock they held into an equivalent amount in promissory notes. Pursuant to the agreement, these notes could be converted back into stock. The Merriman…