A corporation need not disclose to its shareholders its subjective motivation for adopting a program to repurchase its stock.

An executive of Corvex, an ADT Corp. shareholder, met with the management and board of directors of ADT Corp. to encourage a repurchase of stock to create debt and increase the company’s stock price. ADT Corp. went forward with the repurchase plan without disclosing to its shareholders where the idea came from and that the Corvex shareholder was threatening to take over the company’s leadership if the board did not follow his suggestions. Ultimately, after implementing the repurchase plan and accumulating more debt, ADT Corp.’s stock price significantly decreased. This caused its shareholders to sue, alleging, among other things, that ADT Corp. committed securities fraud by failing to disclose its motivation for the stock repurchase plan. The 11^th Circuit disagreed with the shareholders and upheld the dismissal of their case, finding that ADT Corp. was not required to reveal its motives for engaging in the stock repurchase plan.

_{Case Law Alerts, 4^th Quarter, October 2016. Case Law Alerts is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2016 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.}