T.C. Memo. 2001-298
UNITED STATES TAX COURT
FMC CORPORATION AND SUBSIDIARIES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2317-00. Filed November 8, 2001.
P paid the investment banking firm of Goldman,
Sachs & Co. (G) approximately $17.5 million to advise
it financially on a recapitalization. One of G’s
employees disclosed non-public information on the
recapitalization to various Wall Street professionals,
including IB. IB traded P’s stock on the basis of this
non-public information. P first announced that it
would redeem each share of P stock held by the public
in exchange for cash of $70 and one share of stock in
the new company. P later increased the cash payment to
$80 per share and effectuated the recapitalization at
that price. P’s cash payment under the revised plan,
less the cash payment which it would have made under
the original plan, equaled $217,649,340. Subsequently,
P sued G, IB, and others in a Federal District Court in
Illinois alleging, among other things, that they were
responsible for the increased cash payment. The
District Court dismissed the complaint in full but the
Court of Appeals for the Seventh Circuit reversed.
Upon remand, the district court dismissed the complaint
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