564
Opinion of the Court
Gonson, Jacob H. Stillman, Brian D. Bellardo, and Mark Pennington.*
Justice Kennedy delivered the opinion of the Court.
Under § 12(2) of the Securities Act of 1933 buyers have an express cause of action for rescission against sellers who make material misstatements or omissions "by means of a prospectus." The question presented is whether this right of rescission extends to a private, secondary transaction, on the theory that recitations in the purchase agreement are part of a "prospectus."
I
Petitioners Gustafson, McLean, and Butler (collectively Gustafson) were in 1989 the sole shareholders of Alloyd, Inc., a manufacturer of plastic packaging and automatic heat sealing equipment. Alloyd was formed, and its stock was issued, in 1961. In 1989, Gustafson decided to sell Alloyd and engaged KPMG Peat Marwick to find a buyer. In response to information distributed by KPMG, Wind Point Partners II, L. P., agreed to buy substantially all of the issued and outstanding stock through Alloyd Holdings, Inc., a new corporation formed to effect the sale of Alloyd's stock. The shareholders of Alloyd Holdings were Wind Point and a number of individual investors.
In preparation for negotiating the contract with Gustafson, Wind Point undertook an extensive analysis of the company, relying in part on a formal business review prepared by
*Robert L. Schnell, Jr., Wendy J. Wildung, and Stuart J. Kaswell filed a brief for the Securities Industry Association, Inc., as amicus curiae urging reversal.
Patrick E. Cafferty and Jonathan W. Cuneo filed a brief for the National Association of Securities and Commercial Law Attorneys as amicus curiae urging affirmance.
Karen M. O'Brien filed a brief for North American Securities Administrators Association, Inc., as amicus curiae.
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