## Facts

- Homer Goodwin, a shareholder of Cliff Mining Company and a Boston Stock Exchange member, owned 700 shares.
- Cliff Mining had conducted exploratory work for copper; the program ended unsuccessfully and was discontinued in May 1926.
- A geologist prepared a written theory in March 1926 about possible copper deposits beneath the company’s property; company insiders viewed it as promising but speculative and planned to test it later while keeping it confidential.
- A newspaper article reported that the company had discontinued its exploration; the trial judge found the director was not responsible for the article.
- After reading the article, Goodwin sold his 700 shares through a broker on the Boston Stock Exchange, acting on his own judgment without seeking information from company officers.
- At about the same time, the company’s president/director, Rodolphe L. Agassiz (and another insider), purchased shares through brokers on the exchange, including the shares sold by Goodwin.
- The transactions were anonymous: there was no communication between buyer and seller, and neither knew the other’s identity.
- Goodwin sued in equity seeking rescission, redelivery of the shares, or an accounting, asserting the insider’s nondisclosure of material nonpublic information was wrongful.
- The Superior Court dismissed the bill; on appeal, the Supreme Judicial Court treated the trial judge’s factual findings as conclusive because the evidence was not reported.

## Issues

1. Whether a corporate director who purchases the corporation’s shares through anonymous stock exchange transactions owes the selling shareholder a duty to disclose superior nonpublic information.
2. Whether nondisclosure of an expert’s speculative geological theory and the director’s favorable opinion about it can constitute actionable fraud or breach of duty warranting rescission or accounting.

## Decision

- The Supreme Judicial Court affirmed the decree dismissing the bill.
- A director who buys shares on an exchange through brokers, without direct dealings or communication with the seller and without either party knowing the other’s identity, is not liable merely for failing to disclose inside information absent actual fraud or a special duty to the seller.
- The nondisclosed information was a theory and opinion about possible mineral deposits, not a definitive discovery or established fact, and its nondisclosure was not fraudulent concealment on these findings.
- The court found no market manipulation tied to the newspaper article because the director was not responsible for its publication.
- The plaintiff’s sophistication and choice to sell without inquiry further supported denial of equitable relief on these facts.
- No harm to the corporation or breach of duty to the corporation was shown.

## Legal Principles

- In impersonal, anonymous stock exchange trading, a corporate director ordinarily has no fiduciary disclosure duty to a particular selling shareholder absent a special relationship, direct dealing, or actual fraud.
- Nondisclosure of speculative opinions or contingent theories, without more, is less likely to support a claim of fraud than nondisclosure of concrete, verified facts.
- Equitable remedies such as rescission or accounting require a showing of actionable misconduct connected to the transaction, not merely informational advantage.
- A defendant is not liable for a seller’s decision based on public reports where the defendant did not cause or manipulate the publication.

## Conclusion

The court held that an insider’s anonymous open-market purchase of a shareholder’s stock, without direct contact and without actual fraud, does not create a disclosure duty to the seller, particularly where the undisclosed information consists of a speculative expert theory rather than established fact.


Goodwin v. Agassiz, 283 Mass. 358, 186 N.E. 659 (1933)