return the parties to their appropriate 1977 positions, plaintiffs would be required to return interest received on the debentures in the interim. If but for the violation plaintiffs would have converted in 1977, they would have enjoyed the fruits of the stock ownership but foregone the benefits of the debentures. To effect rescission, this must be duplicated to the extent possible.
V. SCOPE OF REMEDY
Defendants previously agreed to extend any remedy obtained in this suit to other similarly situated debenture holders. There was some discussion and apparent confusion on appeal as to the make-up of this "class". We endeavor to define it.
The remedy ordered here is limited to those persons who owned the subject debentures at the time of the violation, December 13, 1977, and who still own those debentures. Those persons who owned debentures on December 13, 1977 and subsequently converted to B&O common stock may also elect to participate in this remedy, obtaining MAC and its dividends, offset by interest accruing on the debentures after December 13, 1977. Those persons who acquired B&O debentures after December 13, 1977 are within the class of Lowry plaintiffs, and their claims will be resolved in that litigation. Those persons who owned B&O debentures on December 13, 1977 and subsequently sold their debentures are not within the scope of either this action or Lowry.
As stated above, we see no need to reopen the record in this case and plaintiffs' motion for additional discovery will therefore be denied. Furthermore, we conclude that the existing record does not provide a sufficient basis for calculation of damages, and plaintiffs' theory of damages does not fit the violation.
We conclude that rescission is the appropriate remedy here. It is the only remedy adaptable to the unique circumstances of this case and the one which most closely redresses the precise violation found by the Court of Appeals.
It will therefore be ordered that plaintiffs have until September 1, 1984, to choose to convert their debentures to B&O common stock. Plaintiffs shall then participate in the dividend in MAC stock on the same basis as shareholders of record on December 13, 1977.
Defendants request for a hearing under 15 U.S.C. § 77c(a)(10) is denied. After plaintiffs have had opportunity to convert, defendants shall proceed to register the MAC stock unless they are able to obtain a no-action letter from the SEC.
By stipulation, defendants have agreed to extend the award in this suit to all debenture holders similarly situated. This remedy will be extended to all persons within the "class" described above. Defendants shall give notice of this opinion and order to the members of that class on or before July 1, 1984.
An appropriate order will issue.
[EDITORS NOTE: PAGINATION IN THE OFFICIAL SOURCE ENDS AT THIS POINT]
On remand from the Court of Appeals with directions to fashion a remedy for the violation of Section 10b of the Securities Act of 1934 found in the above captioned case with respect to a dividend declared by B&O on December 13, 1977, and in accordance with the accompanying Opinion and for the reasons stated therein, it is hereby ORDERED:
1) Plaintiffs' Motion to Reopen Discovery is DENIED.
2) Plaintiffs' Computation of Damages is REJECTED.
3) Plaintiffs shall have until September 1, 1984 to convert their debentures to B&O common stock in the manner provided by the indenture agreement.
4) Upon conversion, plaintiffs shall participate in the MAC stock dividend to the same extent as shareholders of record on December 13, 1977.
5) Upon conversion, plaintiff shall be credited with all dividends paid on B&O and MAC common stock after December 13, 1977. Plaintiffs shall be debited for all interest received on the debentures following December 13, 1977.
6) Plaintiffs who owned B&O debentures on December 13, 1977, and have since converted to B&O common stock, may elect to participate in the remedy by serving notice on defendant B&O on or before September 1, 1984. Those electing to participate shall be governed by the terms of this order.
7) Defendants' Request for a hearing under 15 U.S.C. § 77c(a)(10) is DENIED.
8) After the period for conversion of debentures has expired, unless a no-action letter is obtained from the SEC, defendants shall proceed to register the MAC stock.
9) By stipulation, defendants have agreed to extend this award to all debenture holders who acquired their debentures prior to December 13, 1977 and who still had those debentures or have since converted those debentures to B&O common stock.
10) Defendants shall provide notice and copy of this order to all persons described in paragraph 9 of this order on or before July 1, 1984.