## Facts

- Clearfield Bank and Trust Company (Clearfield) was a community bank whose common stock was unregistered and owned entirely by a limited number of local shareholders.
- Omega Financial Corporation (Omega) sought to acquire Clearfield shares to obtain control.
- Omega sent letters to Clearfield shareholders stating Omega’s interest in purchasing their shares.
- Omega held a shareholder meeting and distributed form sales/purchase agreements; a number of shareholders signed the agreements to sell their shares to Omega.
- Omega scheduled a second shareholder meeting to seek additional stock purchases from remaining shareholders.
- Clearfield sued Omega in federal court and sought injunctive relief, alleging Omega’s letters and agreements were a tender offer containing material misstatements and omissions in violation of Exchange Act § 14(e) (Williams Act).
- Omega argued the Williams Act did not apply because the transactions were privately arranged, intrastate, and involved unregistered, closely held stock.

## Issues

1. Does Exchange Act § 14(e) potentially apply to an acquisition campaign for unregistered, closely held bank stock carried out through letters, meetings, and purchase agreements with local shareholders?
2. Can Omega’s coordinated outreach and use of standardized agreements be treated as a “tender offer” for purposes of § 14(e), despite Omega’s characterization of the transactions as private purchases?

## Decision

- The court rejected Omega’s categorical argument that § 14(e) is inapplicable merely because the stock was unregistered and the transactions were privately negotiated and intrastate.
- The court treated the complaint’s allegations about Omega’s coordinated letters, shareholder meetings, and form agreements as tender-offer-type conduct sufficient to bring the dispute within § 14(e)’s “in connection with any tender offer” framework for purposes of the requested relief.
- As a result, Clearfield’s § 14(e) theory was allowed to proceed on the premise that, if the challenged communications were part of a tender offer, they had to satisfy § 14(e)’s antifraud standard (including the prohibition on material misstatements or omissions).

## Legal Principles

- Exchange Act § 14(e) prohibits material misstatements or omissions in connection with any tender offer and is not limited by the registration status of the target’s securities.
- Whether conduct amounts to a “tender offer” is determined by substance rather than labels; courts evaluate the overall solicitation campaign (including coordinated communications and standardized terms) rather than treating each purchase in isolation.
- A bidder cannot avoid § 14(e) solely by structuring an acquisition through direct solicitations and private purchase agreements if the campaign functions as a tender offer to a shareholder group.
- When a plaintiff plausibly alleges tender-offer-type solicitation plus materially misleading statements or omissions, § 14(e) can support injunctive relief aimed at stopping or correcting the challenged solicitation.

## Conclusion

*Clearfield Bank and Trust Co. v. Omega Financial Corp.* holds that the Williams Act’s § 14(e) can apply to an acquisition effort directed at holders of unregistered, closely held bank stock and that a coordinated letter-and-meeting campaign using form purchase agreements may be treated as a tender offer subject to § 14(e)’s antifraud rules.


Clearfield Bank and Trust Co. v. Omega Financial Corp., 65 F. Supp. 2d 325, Fed. Sec. L. Rep. (CCH) ¶ 90,655 (1999)