## Facts

- Sun Chemical Corporation began purchasing Chromalloy American Corporation stock on the New York Stock Exchange in January 1978.
- By February 5, 1979, Sun had acquired 605,620 shares (about 5.2%), triggering Securities Exchange Act § 13(d) reporting obligations.
- Sun filed Schedule 13D stating the shares were acquired for “investment purposes,” that Sun might acquire additional shares, and that it had discussed its holdings with Chromalloy’s management.
- Sun’s filings included conditional statements that it might later seek control or board representation, coupled with disclaimers of a then-present control intent.
- By mid-1979, Sun’s holdings approached 10% of Chromalloy’s outstanding shares.
- Chromalloy alleged Sun had a concrete plan to obtain control and that Sun’s Schedule 13D disclosures were misleadingly equivocal about that purpose.
- Chromalloy sought a preliminary injunction compelling fuller § 13(d) disclosure and imposing a 90-day halt on Sun’s purchases of Chromalloy stock.
- The district court ordered Sun to disclose an intention to obtain control but denied the requested 90-day standstill.
- Chromalloy appealed the denial of broader relief; Sun and its CEO Norman E. Alexander cross-appealed the disclosure order.

## Issues

1. Whether the district court abused its discretion or committed legal error by ordering Sun, at the preliminary injunction stage, to disclose an intention to obtain control under § 13(d).
2. Whether the district court abused its discretion by denying Chromalloy’s request for a 90-day injunction barring Sun from further purchases of Chromalloy stock.

## Decision

- The Court of Appeals affirmed the district court’s preliminary injunction order in full.
- The court upheld the requirement that Sun amend its disclosures to state an intention to obtain control.
- The court upheld the denial of a 90-day trading moratorium.
- The court found no error of law and no abuse of discretion in the district court’s tailoring of preliminary relief.

## Legal Principles

- Section 13(d) requires candid, non-misleading disclosure of the acquirer’s purpose in obtaining more than 5% of a registered class of equity securities, including plans or proposals relating to control or influence.
- Vague or conditional “may seek control” language, combined with disclaimers, can be inadequate if the acquirer has formed a present control intent; courts may order corrective disclosure.
- In § 13(d) cases, equitable relief is generally oriented toward curing disclosure deficiencies rather than restricting otherwise lawful market purchases.
- A preliminary injunction order is reviewed for abuse of discretion; appellate courts defer to district courts’ balancing of equities and selection of appropriately tailored interim remedies.

## Conclusion

The Eighth Circuit sustained preliminary relief requiring clearer § 13(d) disclosure of an acquirer’s control intent, while refusing to require a temporary halt in stock purchases absent a stronger showing that such market-disruptive relief was necessary beyond corrective disclosure.


Chromalloy Am. Corp. v. Sun Chem. Corp., 611 F.2d 240 (8th Cir. 1979)