and date were amended before being finally approved. They also distributed prospectuses of the new company. In such statement it was declared that the intention was to continue the policy of operation and management and to preclude the issuance of warrants for more than 1,000 shares to any policyholder. It was also declared therein that the subscription price had been fixed at $ 20, by reason of the requirement of the law limiting the expenses to 10% of the capital.
12. The notice of the meeting of policyholders, prospectuses, proxy forms, and warrants to subscribe were sent out by the company by mail.
13. In pursuance of the policyholders' decision to convert and their authorization, the directors entered into an agreement with Bioren & Company to underwrite the issue of stock, whereby the company undertook to sell so much of the issue as was not subscribed by policyholders upon terms requiring the purchasers of the stock to deposit their shares in a voting trust, with the view to having the voting power of that stock used to continuing the management and policy of the company and to avoid liquidation.
14. The underwriting agreement provided that the distribution of stock by the underwriters was to be within their sole discretion, although a collateral oral understanding was had that the underwriters would so far as possible give preference to policyholders of Mutual. After entering into such arrangement, Rosenlund, Cushmore and some of the officers and directors requested an allotment of such shares to them.
15. Warrants for about 5,200 shares were acquired by Bioren & Company representing rights not exercised by policyholders. Of that number Bioren & Company allotted approximately 1,900 to officers and directors of the company, several hundred to partners and associates, and the remaining to policyholders, brokers and others deemed to have some interest in the company, including 500 to Rosenlund. The latter allotment was with the approval of the officers and directors of the company after they knew of his other acquisitions.
For the purposes of the record, we affirm and adopt the requests of the parties for findings of fact as follows:
Plaintiffs' requests numbers 1-22, 24-26, 29, 30, 34, 36, 38, 40, 44, 52, 53, 60, 62, 63, 67, 68, 71, 72, 75, 76, 79 and 80.
Defendants requests numbers 1-14, 16-20, 22-52, 54-61, 63, 65-83, 85-90, 92-95,# 97, 98, 100, 102-109, 111-116, 118-143, 145, 147-152, 154-165, 168-170, 172, 174-177, 179-188;
Defendant Rosenlund's requests numbers 5, 7, 8, 9, 10, 11;
Independent Protective Committee's requests numbers 1-16.
All other requests for findings of fact are refused.
Conclusions of Law
1. The concealment from the directors of Mutual by Rosenlund that he was acquiring warrants to subscribe to the stock of the new company contrary to the desire of the company as declared in their statement to the S.E.C. and the prospectus was not in violation of the Securities Exchange Act of 1934 and regulations promulgated thereunder.
2. The purchase by the defendant directors of stock in the company was not accomplished by any scheme or device in violation of the Act or regulations.
3. The breach of any fiduciary duty owed by the defendants to the company and giving a right of action to the company did not result from any artifice, scheme, device or practice in contravention of the Act and regulations, nor was any such breach accomplished through the use of any instrumentality of interstate commerce or of the mails, or the facilities of a national securities exchange.
4. This court has no power to exercise its equitable jurisdiction to direct an accounting for breach of the fiduciary duties of officers or agents of a corporation, where it is not shown that the breaches involve the violation of a federal statute or that diversity of the citizenship of the parties exists.
5. Plaintiffs' motion to amend the bill by modification of the prayer should be granted for the purposes of the record.
6. The bill of complaint should be dismissed.
The requests of the parties for conclusions of law are approved and adopted as follows:
Defendants' requests numbers 1, 2, 5, 6, 8-10, 12-14, 16, 17, 20-26, 29, 32, 34, 35, 37, 38, 40-42, 45, 48-62;
Defendant Rosenlund's requests numbers 1, 3, 4, 5, 6, 7, 10, 11;
Independent Protective Committee's requests numbers 1, 2, 3, 5, 6, 7.
All other requests for conclusions of law are refused.
Plaintiffs' motion to amend the bill by modification of the prayer for relief is granted for the purposes of the record, but the bill is dismissed for want of jurisdiction in this court.
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