Miller v. Thane International, Inc.

Thane International (defendant) merged with Reliant Interactive Media Corporation in a share swap valuing Thane shares at $7.00 each, after Thane filed a prospectus falsely stating its shares were approved to trade on the NASDAQ National Market System; the shares instead traded on the lower-tier NASDAQ Over-the-Counter Bulletin Board. In the twelve trading days after the shares began trading there, the price actually held between $7.00 and $8.50, only dropping below $7.00 months later alongside poor earnings reports. A class of Reliant shareholders (plaintiffs) sued Thane under section 12 of the Securities Act, and the district court found no loss causation and ruled for Thane; the plaintiffs appealed, arguing low trading volume and Thane's market anonymity meant the twelve-day price data did not actually reflect awareness of the misrepresentation.