James P. Walker


Management of a corporation has a general duty to determine whether a tender offer is in the best interest of the corporation and its shareholders. When management uses defensive tactics to respond to a tender offer, they are not acting in the best interests of the shareholders, because their actions are misleading. Shareholders seeking to attack the use of defensive tactics during a tender offer may proceed under state corporations laws, or federal securities laws. Under state law, the judiciary typically scrutinizes management activity under the business judgment rule, limiting scrutiny to situations where management decision are influenced by personal considerations. Under federal securities law, no fiduciary relationship from management to shareholders is necessitated. This note examines the nature of "manipulative" defensive strategies to thwart a tender offer under the Williams Act, and the Supreme Court's rejection of a federal fiduciary standard under § 10(b) of the Securities Exchange Act of 1934.