## Facts

- Lafer, Amster & Co. (LACO), a New York limited partnership engaged in risk-arbitrage investing, began buying shares of Graphic Scanning Corp. (Graphic) in 1984 after Graphic publicly announced an intent to liquidate its business. ()  
- By August 1985, LACO had accumulated approximately 5% of Graphic’s outstanding shares, triggering a duty to file a Schedule 13D with the SEC. ()  
- The original Schedule 13D stated that LACO did not then intend to gain control of Graphic and supported Graphic’s plan to liquidate, but reserved the right to reconsider if liquidation did not occur within a reasonable time. ()  
- On January 28, 1986, Graphic filed an S‑1 registration statement with the SEC indicating that the previously announced liquidation might not go forward, undermining the premise of LACO’s investment strategy. ()  
- LACO thereafter held several meetings with Graphic’s management and, by early February 1986, began to consider more aggressive steps, including mentioning a possible proxy contest to another Graphic shareholder on February 3, 1986. ()  
- On February 10, 1986, LACO filed Amendment No. 6 to its Schedule 13D, disclosing that it was considering, on a preliminary basis, waging a proxy contest for control of Graphic. ()  
- On February 28, 1986, LACO filed Amendment No. 7 announcing that it had decided to join with other Graphic shareholders in a proxy contest to obtain control of the company. ()  
- The Securities and Exchange Commission (plaintiff) brought an enforcement action against Amster & Co., LACO’s successor (defendant), alleging violations of §13(d) of the Securities Exchange Act of 1934 and its rules for failing to make timely and adequate disclosure of its change in intent regarding control of Graphic. ()  
- The SEC argued that LACO was required to amend its Schedule 13D as soon as it formed a desire or serious consideration to wage a proxy contest, not only when the decision to proceed became final; Amster & Co. moved for summary judgment. ()  

## Issues

1. Whether §13(d) of the Securities Exchange Act and Schedule 13D require an investor to amend its filing when it merely begins to consider or desire a change of purpose (such as mounting a proxy contest for control), or only when there is a concrete plan or decision to pursue that course of action.  
2. Whether, on the undisputed facts concerning the timing of LACO’s internal deliberations and external actions, Amster & Co. violated §13(d) by failing to amend its Schedule 13D before filing Amendments 6 and 7 in February 1986.  
3. Whether the SEC was entitled to injunctive or other equitable relief, or whether Amster & Co. was entitled to summary judgment as a matter of law because no material misstatement or omission occurred within the meaning of §13(d).  

## Decision

- The district court held that §13(d) does not require disclosure of every internal desire, preliminary thought, or tentative consideration regarding a change of control; rather, a duty to amend arises when there is a material change in the “plans or proposals” that reaches the level of a concrete intention or formulated plan.  
- The court concluded that LACO’s February 10, 1986 Amendment No. 6, which disclosed that it was considering a proxy contest, and its February 28, 1986 Amendment No. 7, which disclosed its decision to join a proxy group, adequately reflected its evolving intentions within a reasonable time after those intentions became sufficiently definite. ()  
- The court determined that the SEC had not shown that LACO formed a concrete intent to seek control, or agreed to participate in a proxy contest, prior to the dates reflected in the amendments, and thus had not established that any earlier amendment was required. ()  
- Because no actionable violation of §13(d) was demonstrated on the undisputed record, the court granted Amster & Co.’s motion for summary judgment and denied the SEC’s request for injunctive relief. ()  

## Legal Principles

- Section 13(d) of the Securities Exchange Act aims to provide investors and the market with timely information about persons who acquire significant holdings in public companies and who may intend to influence or obtain control.  
- Schedule 13D requires disclosure not only of current ownership levels but also of the filer’s present plans or proposals regarding major corporate transactions or changes in control, and mandates prompt amendment when “material changes” occur in the facts set forth.  
- A “material change” in plans for §13(d) purposes generally arises when an investor’s intentions become sufficiently definite or concrete—such as a formulated plan to seek board control or join a proxy group—rather than at the stage of mere internal deliberation, dissatisfaction, or exploratory discussion.  
- The statute seeks a practical balance: it does not compel the disclosure of every speculative or contingent thought, which could inundate the market with confusing information, but it does require prompt disclosure once an investor’s plans cross the line from contemplation to actionable intent.  
- In evaluating §13(d) claims on summary judgment, courts closely examine the timing of internal decisions, external communications, and formal filings to determine when a filer’s intent materially changed and whether amendments were filed within a reasonably prompt period.  

## Conclusion

Securities & Exchange Commission v. Amster & Co. clarifies that §13(d) requires prompt amendment of a Schedule 13D when an investor’s plans regarding control of an issuer become concrete and actionable, but not at the stage of mere consideration or desire. Because LACO’s amendments reflected its intentions within a reasonable time after they became sufficiently definite, the court found no §13(d) violation and granted summary judgment for Amster & Co.


Securities & Exchange Commission v. Amster & Co., 762 F. Supp. 604 (S.D.N.Y. 1991)