Reading Section 11 of the Securities Act of 1933 broadly, the U.S. Court of Appeals for the Ninth Circuit ruled Monday that David Hildes, a director of Harbinger Corp., can proceed with his suit against former directors and auditors of Peregrine Systems Inc.
"Although the voting agreement and irrevocable proxy irrevocably committed Hildes to have his shares voted in favor of the merger, it did not irrevocably commit him to exchange his Harbinger shares for Peregrine shares," Judge Carlos Lucero, visiting from the Tenth Circuit, wrote for a unanimous Ninth Circuit panel in Hildes v. Arthur Andersen. "Any exchange of shares remained contingent on the consummation of the merger."
