Semerenko v. Cendant Corp.
United States Court of Appeals for the Third Circuit
223 F.3d 165 (2000)
Cendant Corp. (defendant) made a tender offer for American Bankers Insurance Group (ABI), whose stock, held by shareholder Semerenko (plaintiff) and others, rose in value amid the pending acquisition before dropping sharply once Cendant's own financial misrepresentations became public; Semerenko and other ABI shareholders sued Cendant, alleging its misrepresentations artificially inflated ABI's stock value before the truth caused its collapse, and the district court dismissed the complaint. Semerenko appealed.
Whether a misrepresentation satisfies the 'in connection with' requirement of Section 10(b) of the Exchange Act when publicly disseminated and material at the time of dissemination, and whether a plaintiff may prove fraud on the market by establishing reasonable reliance on a corporation's misrepresentations.