In CASE 22

Multiple Choice

In CASE 22.1SEC v.Texas Gulf Sulphur Co.(1971) the question was whether a press release giving a misleading impression about the results of a drilling operation violated Rule 10b-5.How did the court rule?

A) That the company acted only in response to rumors and had no obligation to set forth additional facts regarding the drilling operation, thereby negating any basis for Rule 10b-5 liability.
B) That the company violated Rule 10b-5 by issuing the misleading press release.
C) That a press release standing alone may not violate Rule 10b-5 and that the company could not be held liable because it made no actionable statements outside the press release.
D) That the company could be held liable under Rule 10b-5 but only because it issued other statements in addition to the press release.