A Post-Santa Fe Blueprint for Courts in Rule 10b-5 - Actions for Breach of Fiduciary Duty: Kidwell v. Meikle

Pursuant to the Securities Exchange Act of 1934, the Securities and Exchange Commission adopted SEC Rule 10b-5. Introduced without much fanfare in 1942, the Rule\u27s potential effect was not then fully appreciated. There is no question that over the years the courts have interpreted the broad language of rule 10b-5 expansively, and while a great deal of the law governing securities matters is reflected in circuit court opinions, the Supreme Court has recently undertaken an active role in determining the scope of rule 10b-5. In the recent case of Santa Fe Industries, Inc. v. Green, the Supreme Court held that a breach of fiduciary duty, unsupported by an allegation of manipulation or deception, is not actionable under rule 10b-5. A number of courts have had the opportunity to interpret the Santa Fe decision and to formulate tests to determine if plaintiffs have alleged sufficient deception or manipulation to fall within the ambit of rule 10b-5; yet there is an apparent conflict among the circuits as to the proper application of Santa Fe. This Comment will examine the approach taken recently by the Ninth Circuit Court of Appeals where the court formulated a blueprint for courts to follow in this area