Section 14(e) of the Securities Exchange Act (15 USC 78n(e)) makes it unlawful for a person to make a false statement or engage in any fraudulent or manipulative acts in connection with a tender offer.  In Aaron v. SEC (1980) 446 U.S. 680, the Supreme Court held that section 15 U.S.C. § 77q(a)(2) (Section 17(a)(2) of the Securities Act) which likewise prohibits false statements in connection with the issuance of securities requires only a showing of negligence, not scienter.  So despite other circuits’ holdings to the contrary, this opinion concludes that only negligence, not scienter, need be shown to state a claim under Section 14(e).  The decision also holds that there is no private right of action for violation of section 14(d)(4) (15 U.S.C. § 78n(d)(4)) which requires a company’s statement of recommendation to include various information required by SEC regulation.

Ninth Circuit Court of Appeals (Murguia, J.; Christen, J., concurring); April 20, 2018; 2018 WL 1882905