Beecher v. Able

Douglas Aircraft Company (Douglas) sold $75 million in debentures under a prospectus the district court found contained a materially false break-even prediction, giving rise to liability under Section 11 of the Securities Act of 1933. In calculating damages, neither side wanted the debentures valued at their plain market price: the plaintiff argued the true value should be below market price given Douglas's financial troubles, while Douglas argued the value should be above market price given its prospects for recovery, and that a poorly timed release of weak third-quarter earnings had triggered panic selling that artificially depressed the market price right before the plaintiff filed suit.