However, even if approval of the reorganization plan did create a Holding Company entirely free of ICC jurisdiction, we fail to see that that change in the corporate entity required the shareholders to make the kind of significant investment decision which § 10(b) and Rule 10b-5 were designed to protect. Although such a change in ICC oversight could not have been brought about by amending the articles of incorporation, it was nevertheless a change more analogous to the restructuring of an existing corporation than to a cash sale or exchange of shares.
Section 10(b) and Rule 10b-5 were designed by Congress to protect the purity of the process of buying and selling securities and to insure that investors will receive full disclosure of the information they need if they are intelligently to make significant investment decisions. In order to achieve these ends, "Section 10(b) must be read flexibly, not technically and restrictively." Superintendent of Insurance v. Bankers Life & Casualty Co., 404 U.S. 6, 12, 92 S. Ct. 165, 169, 30 L. Ed. 2d 128 (1971). This is especially true with respect to interpreting the requirement that to have standing under § 10(b) a plaintiff must have purchased or sold securities, first enunciated in Birnbaum v. Newport Steel Corp., 193 F.2d 461 (C.A. 2, 1952), and still the law in actions for damages in this and every other Circuit which has had occasion to pass on the question. See Kahan v. Rosenstiel, 424 F.2d 161 (C.A. 3, 1970); Edelman v. Decker, 337 F. Supp. 582 (E.D. Pa. 1972); Mount Clemens Industries v. Bell, 464 F.2d 339 (C.A. 9, 1972).
However, although the terms purchase and sale have, as we discussed in our previous Opinion, been given greatly expanded meanings since Birnbaum, not every corporate act which merely happens to involve transactions in securities is a § 10(b) purchase or sale. A reorganization plan which has the effect of restructuring an existing corporation falls, for reasons we have previously discussed and have elaborated here, outside the scope of the Section and the Rule. Therefore, we reaffirm our conclusion that plaintiffs who were only holders, and not open market purchasers and sellers, of Penn Central stock at the time of 1969 upwards merger do not have standing to sue under § 10(b).
II. Section 13(a) of the Exchange Act
Plaintiffs have not attempted to refute our reasons for concluding that no implied private right of action exists under § 13(a) of the Exchange Act and that § 18(a) is the exclusive remedy for violations of § 13(a). However, they now argue that a private right of action may be implied under § 13(a) because § 18(a) applies only to false and misleading statements and does not reach omissions and non-disclosures. Therefore, plaintiffs argue, the same principles of assuring vigorous enforcement of the securities laws and providing broad protection for investors, which have led the courts to imply private rights of action under other sections of the securities acts, should lead us to imply a private right of action in § 13(a). See, e.g., J.I. Case Company v. Borak, 377 U.S. 426, 84 S. Ct. 1555, 12 L. Ed. 2d 423 (1964); Chris-Craft Industries, Inc. v. Piper Aircraft Corp., 480 F.2d 341 at 356 (C.A. 2, 1973). This argument is without merit. The language of § 18(a) shows that it does cover material omissions. The legislative history of the statute removes any doubt on this point. The House Report reporting out the final version of § 18(a) states that the Senate amendment which expressly provided that a "statement", for purposes of § 18(a),
"shall be construed to include any omission to state a material fact * * * is omitted from the substitute as surplusage in view of the fact that a statement obviously may be misleading because of a material omission." H.R. Rep. No. 1838, 73rd Cong. 2d Sess. 36 (1934).