In re Federal Water Service Corp.

Chenery (plaintiff), which controlled Water Service's management through a controlling block of voting stock, acquired additional stock during Water Service's reorganization specifically to preserve that voting control, and the SEC ordered Chenery to divest the newly acquired stock, reasoning courts of equity had established that corporate management cannot trade in a company's stock during reorganization given management's fiduciary obligation to all shareholders; after the Supreme Court rejected the SEC's initial justification and remanded, Chenery proposed the identical plan the SEC had already rejected, prompting the SEC to revisit its ruling on other independent grounds, including its own expertise overseeing similar reorganizations.