The U.S. District Court for the Southern District of New York recently denied a request by a co-founder and director of Enzo Biochem, Inc. for a preliminary injunction to delay the company’s shareholder meeting by 45 days. In support of its motion, the plaintiff alleged that Enzo and certain of its directors violated Section 14(a) of the Securities Exchange Act and several rules promulgated thereunder by: (1) filing a proxy statement containing material misstatements of fact; (2) failing to file a preliminary proxy statement; and (3) soliciting shareholder votes prior to the filing of the proxy statement. Plaintiff’s claims were primarily based on Enzo’s failure to include a reference in its proxy statement to a letter plaintiff had written in which he informed Enzo’s board that he would be nominating several candidates for election to the board and on several related allegations concerning his efforts to nominate an alternate slate of directors.
The district court held that even if the proxy statement was required to disclose that the plaintiff was proposing an alternative slate of directors based solely on his letter to the board, because Enzo filed a supplement to the proxy statement 16 days prior to the shareholder meeting (after plaintiff filed his own proxy statement), any omission was cured. The court also found that Enzo was not required to file a preliminary proxy statement because the limited matters to be addressed at the shareholder meeting triggered an exception to the filing requirement and that plaintiff’s letter to the board did not constitute a “solicitation” of shareholders that would have rendered the exception inapplicable. Finally, the district court found that while certain directors of Enzo met with two major shareholders prior to the filing of the proxy statement, there was insufficient evidence that any solicitation of the shareholders’ votes occurred during the meetings. (Rabbani v. Enzo Biochem, Inc., No. 10 Civ. 170, 2010 WL 343511 (S.D.N.Y. Feb. 1, 2010))