Full opinion text
OPINION STEWART, District Judge: “Federal courts,” we noted last year, “have become a common arena in which tender offer battles are waged.” Missouri Portland Cement Corp. v. Cargill, Inc., 375 F.Supp. 249, 251 (S.D.N.Y.1974) (Stewart, J.), aff’d in part and rev’d in part, 498 F.2d 851 (2d Cir.), cert. denied, 419 U.S. 883, 95 S.Ct. 150, 42 L.Ed.2d 123 (1974). These actions bring to the federal judicial arena a pretender offer battle involving alleged violations of the federal securities laws. Basically, they involve a claim by Lafayette Radio Electronics Corporation (“Lafayette”) that Jewelcor, Incorporated (“Jewelcor”) and its officers have commenced a plan to acquire control of Lafayette by illegal and improper means, and a counter allegation by Jewelcor against various Lafayette directors and officers (“Lafayette directors”) that they improperly and unlawfully engaged in a scheme or “battle plan” to thwart any attempt by Jewelcor to obtain control of Lafayette. Lafayette’s action against Jewelcor is brought pursuant to Section 27 of the Securities Exchange Act of 1934 (“the Exchange Act”), 15 U.S.C. § 78aa, to enjoin alleged violations of Sections 13 (d) and 14(a) of that Act, 15 U.S.C. §§ 78m(d) and 78n(a), and the rules and regulations of the Securities and Exchange Commission (“SEC”) promulgated thereunder, in connection with J ewelcor’s purchase of approximately 9.8 percent of the shares of Lafayette’s common stock and the solicitation by Jewelcor of Lafayette’s shareholders in connection with Lafayette’s adjourned annual, meeting of shareholders. More specifically, Lafayette alleges that Jewelcor and its officers violated the federal securities laws by misrepresenting their actual purpose in purchasing Lafayette stock— to strengthen Jewelcor’s position in merger discussions with Lafayette’s management—by stating that the shares were purchased “for the purpose of investment;” by misrepresenting the source of the funds used for the purchase of the Lafayette stock—borrowed funds—by asserting that Jewelcor’s “general assets and working capital” Were expended; and by misrepresenting the outcome of a proxy solicitation by stating that a certain proposal was defeated when in fact it had not been voted on. In this action, Lafayette seeks to enjoin preliminarily defendants Jewelcor, its president Seymour Holtzman, and its vice presidents Frank P. Cuscela and Leonard M. Shendell, and all persons acting on their behalf from: (a) acquiring or attempting to acquire in any manner any shares of stock of Lafayette; (b) voting any stock or proxies or consents of Lafayette held or acquired after the initiation of the alleged plan, combination, or conspiracy of the defendants, other than in favor of the pending second proposal at Lafayette’s adjourned annual stockholders meeting; and (c) soliciting any proxies or consents from any shareholders of Lafayette or utilizing in any fashion whatsoever any proxies or consents heretofore acquired other than in favor of the pending second proposal. Jewelcor and its officers, opposing this motion for a preliminary injunction, have themselves moved for summary judgment pursuant to Rule 56(c) of the Federal Rules of Civil Procedure (“F.R.Civ.P.”) on the ground that since there are no issues of material fact, they are entitled to judgment as a matter of law. Jewelcor and its officers also have filed a counterclaim similar to the separate action Jewelcor filed against the Lafayette directors. Jewelcor’s counterclaim and its separate action against the Lafayette directors are brought pursuant to Section 27 of the Securities Exchange Act of 1934, 15 U.S.C. § 78aa, to enjoin, inter alia, alleged violations of §§ 9(a), 13(d), and 14(a) of that Act, 15 U.S.C. §§ 78i(a), 78m(d), and 78n(a), and the rules and regulations of the SEC promulgated thereunder, in connection with the Lafayette directors’ purported conspiracy to prevent a takeover of Lafayette by Jewelcor. Specifically, Jewel-cor seeks to enjoin preliminarily the Lafayette directors from: (a) purchasing stock of Lafayette until the “group” purportedly formed by defendants files a Schedule 13D with the SEC and the American Stock Exchange (“Amex”); (b) voting any proxies obtained by them based on Lafayette’s allegedly false and misleading proxy materials at Lafayette’s adjourned annual shareholders meeting and making a tender offer for Lafayette stock; and (c) continuing to allegedly manipulate the price of Lafayette stock. Jewelcor further seeks an order overturning the vote of Lafayette’s shareholders at the November 21, 1974 annual meeting (the nonadjoumed part) on the ground that such vote allegedly was obtained as a result of false and misleading proxy materials. The Lafayette directors oppose this motion, and have brought a motion to dismiss five of the seven causes of action in the Jewelcor amended complaint pursuant to Rule 12(b)(6), F.R.Civ.P. These actions and the four pending motions come before us some four months after Lafayette filed its original complaint on December 17, 1974, and less than two months after Jewelcor commenced its counter action on February 1, 1974. During that period of time, extensive discovery has been had by both sides, involving more than 40 depositions in at least eight cities, of the principal officers and directors of Lafayette and Jewelcor, and others; and scores of documents have been produced by both sides. Jewelcor’s counter action against the Lafayette directors was filed as a result of information obtained during this discovery. Additionally, believing that continued violations of the federal securities laws were taking place, Jewelcor brought on by order to show cause a motion for a temporary restraining order (“TRO”) to enjoin preliminarily the Lafayette directors and those in active concert or participation with them from purchasing additional shares of Lafayette stock as part of their alleged plan to prevent a takeover of Lafayette by Jewelcor, and conducting the adjourned annual meeting of Lafayette shareholders, then scheduled for March 25. This Court issued a TRO on March 24th enjoining further purchases of Lafayette stock by the Lafayette directors (and at. the same time prohibited purchases of Lafayette stock by Jewelcor and its officers and directors). This Court did not grant temporary injunctive relief with respect to the adjourned annual meeting of Lafayette, however, since counsel for Lafayette represented to this Court that the meeting would be adjourned until April 22. Awaiting a determination from this Court of the motions pending before it, counsel for Lafayette agreed to further adjourn the stockholders meeting until April 29. Factual Background Lafayette is a New York corporation with its principal place of business in Syosset, New York. It is engaged in selling electronic equipment by mail order catalogue, at wholesale and at retail prices, through more than 100 company-owned stores and approximately 375 associate (franchise) stores located throughout the country. Lafayette has in excess of 2,300,000 shares of common stock outstanding, which are listed and traded on the Amex and are held by approximately 2,800 record shareholders and by approximately 6,000 beneficial shareholders. The common stock of Lafayette has been traded at prices ranging from $3.00 to $5.50 per share during the period discussed herein. Jewelcor is a Pennsylvania corporation whose three principal lines of business are: (1) the sale of jewelry and general merchandise, including merchandise sold by Lafayette, at catalogue showrooms, (2) the distribution of popular-priced name brand watches and the manufacture and sale of precious jewelry; and (3) high-speed commercial printing, including the printing of catalogues. As of September 30, 1974, Jewelcor had more than 2,800,000 shares of common stock outstanding, held by approximately. 2,800 record shareholders. Jewelcor’s shares are listed and traded on the New York Stock Exchange. Between Máy 31, 1974 and August 30, 1974, Jewelcor accumulated approximately six percent of Lafayette’s outstanding stock in some 70 separate transactions. On the latter date, Jewelcor filed a Schedule 13D statement pursuant to § 13(d)(1) of the Securities Exchange Act of 1934, stating that it had purchased 145,300 shares of the common stock of Lafayette at prices ranging from $3.87 to $4.25 per share. The Schedule 13D further stated: Item 3: “The funds used in making the purchases described in this statement, aggregating approximately $640,000, were derived from the general assets and working capital of Jewelcor;” and Item 4: “The Common Stock of Lafayette to which this statement relates was purchased by Jewelcor for the purpose of investment. Although Jewelcor has considered the possibility of a future acquisition of control of the business of Lafayette, whether by means of a tender offer, merger or other business combination, open market purchases, private transactions, or otherwise, Jewelcor has not made any definitive plans to attempt to acquire control of Lafayette, nor has Jewelcor entered into any contracts, arrangements or understandings with Lafayette or its affiliates for this purpose. Moreover, any future decision by Jewelcor to acquire control of Lafayette by means of cash purchases of shares might also be dependent upon Jewelcor’s ability to obtain necessary bank or other financing on terms satisfactory to Jewelcor.” Between August 30 and November 15, Jewelcor filed two amendments to its Schedule 13D statement to reflect additional purchases of Lafayette stock, which had increased its share to approximately 9.8 percent of Lafayette’s stock, as noted above. Jewelcor began purchasing Lafayette stock on May 31 following a meeting at its offices of its president, Seymour Holtzman, and its officers Shendell and Cuscela, and Thomas Unterberg and A. Robert Towbin, partners in Jewelcor’s investment banking firm of C. E. Unterberg, Towbin & Co. (“Unterberg, Tow-bin”). During the May 31, 1974 meeting, a Jewelcor official suggested that Lafayette should not be told that Jewel-cor was buying Lafayette stock until after a block had been accumulated (Tow-bin, 43). To maintain secrecy, Jewel-cor immediately proceeded to set up a special numbered brokerage account through which all its Lafayette purchases were made. (Shendell, 114-15). Those present at the meeting also explored the possibility of a relationship between Jewelcor and Lafayette. Holtzman or perhaps someone else suggested that Jewelcor buy some Lafayette stock to induce Lafayette to meet with Jewel-cor to discuss a merger (Unterberg 36-37, 39). On June 26, 1974, Holtzman reported to Jewelcor’s board of directors that 25,-000 shares of Lafayette stock had been acquired and that Jewelcor management was “considering the possibility of a ‘friendly’ tender offer for a controlling interest in Lafayette [stock].” (Jewelcor Brief in Opposition to Preliminary Injunction, at 16). The board of directors then passed a resolution permitting the purchase of additional Lafayette stock, providing that such purchases not exceed $600,000 or 100,000 shares, whichever first occurred. The next day, Towbin decided to prepare a financial report on Lafayette after a meeting with Lafayette’s president, Leonard Pearlman. A copy of this report, dated July 25, 1974, was sent to Jewelcor shortly thereafter. The report noted that profitability and earnings per share had declined since the previous year, but, on an optimistic note, stated that Lafayette is a “strongly financed” company with products which enjoy a “high quality” image. (Holtzman Ex. 5, at 2). A majority of the Jewelcor board of directors participated in a conference call on August 5, 1974, during which the board informally approved the purchase of a block of Lafayette stock in excess of the amount previously authorized by the Jewelcor board of directors on June 26, subject to subsequent formal ratification. The purchase of this block would have increased Jewelcor’s holdings of Lafayette to more than five percent of outstanding shares, thus necessitating the filing of a Schedule 13D. The participants later discussed that the purchase of this stock “would be a good investment and would enhance the value of the overall block of stock of Lafayette Radio and it would place the company in a strong position in its discussion with Mr. Pearlman.” (Cuscela, 26). About a week later, on August 13, Towbin and Unterberg lunched with Pearlman to discuss Jewelcor’s possible interest in a merger with Lafayette, at Holtzman’s request. This was the first time that Pearlman became aware that Jewelcor had been buying Lafayette stock. (Pearlman, 151). This meeting is described in the minutes of Jewelcor’s board of directors’ meeting of August 26, on the basis of Unterberg’s report to the Jewelcor directors. According to the minutes: Mr. Unterberg reported that approximately two weeks ago he and his partner, Mr. Robert Towbin, met with Mr. Leonard Perlman [sic], president of Lafayette Radio, and informed the latter that the Company had made market purchases of the stock of Lafayette Radio, that perhaps a friendly tender or merger between [the] Company and Lafayette Radio could be explored and that, in any event, based upon the Company’s stock ownership in Lafayette Radio, he, Mr. Perlman [sic] ought to meet with the principals of the Company. Mr. Unterberg further reported that Mr. Perlman [sic] did not think such a meeting was timely but indicated that he would be in contact with Mr. Holtzman within the week . . .. (Holtzman Ex. 3, at 1). The minutes also indicate that Holtzman then contacted Pearlman and set up a meeting for September 15. According to the minutes, Holtzman stated that “at least until his meeting with Mr. Perlman [sic], management could not recommend that the Board definitely determine whether or not to seek control of Lafayette Radio.” {Id. at 2). At the August 26th board meeting, the directors approved a resolution authorizing the purchase of up to 9.8 percent Lafayette stock provided that no more than an additional $300,000 be expended. The board also resolved that pending further resolution, “no definitive acts be undertaken whereby the Company seeks control of Lafayette Radio Electronics Corporation.” Four days after the meeting, Jewelcor filed its Schedule 13D statement with the SEC and sent a copy to Lafayette. On September 3, 1974, Pearlman met with his attorneys Arthur Borden and John Ball, and with Towbin and Unterberg. Towbin stressed to Pearlman that Jewelcor was not considering an “unfriendly” action against Lafayette (Tow-bin, 80), and that he and Unterberg did not think Jewelcor had the funds to undertake any “unfriendly” action. Tow-bin explained that Jewelcor had bought Lafayette stock to encourage Lafayette’s management to meet with Jewelcor to discuss the possibility of some form of business combination between them. (Towbin, 80). Holtzman and Towbin met with Pearl-man on September 25, 1974, since the original September 15 date had been postponed. Holtzman described Jewel-cor to Pearlman with an eye to persuading him that some form of “friendly” business combination would be mutually beneficial. (Towbin, 92; Mise., Doc. 15). Pearlman replied that he was disturbed by Jewelcor’s purchases of Lafayette stock and asked Holtzman not to purchase any more Lafayette stock. Holtzman responded that he would have to consult his board of directors, but that he anticipated that Jewelcor would make further purchases of Lafayette stock to increase its investment, since he felt the stock was undervalued. (Towbin, 92; Holtzman, 104). On or about October 22, Jewelcor inquired about bidding for the stock held by Lafayette’s- largest shareholder, the Estate of Abraham Pletman, by sending letters to the estate’s executors, Borden, Ball, and the Chase Manhattan Bank. The estate owned shares constituting some 14 percent of the outstanding Lafayette stock. Shortly after these letters were sent, Pearlman expressed his apprehensions about Jewelcor’s actions in conversation with Unterberg, stating that Jewelcor was “certainly not acting in a friendly manner.” (Jewelcor Brief in Opposition to Preliminary Injunction, at 36). Meanwhile, between October 16 and 24, Pearlman, Curwin and Ball met with representatives of Marine Midland Bank, First National City Bank and Goldman, Sachs & Co., the investment banking firm, to plan defensive strategy in the event of a tender offer. On October 23, Lafayette mailed to its shareholders proxy solicitations for its annual meeting scheduled for November 21, 1974. Shareholders were asked to approve three proposals: (1) an amendment to Lafayette’s certificate of incorporation increasing its board of directors to nine, creating three classes of directors to serve for staggered three-year terms, and providing for removal of directors only for cause; (2) an amendment to the certificate of incorporation increasing the shareholder vote required for alteration, change or repeal of the amendments in the first proposal from a majority to two thirds (approval of this proposal itself required a two thirds vote), and (3) the election of four directors. The October 23 proxy materials, challenged by Jewelcor as false and misleading, stated inter aMa, that: “To the best of the Company’s knowledge, no other company is presently attempting to acquire control of the company.” They also stated that the purpose of the proposed amendments was to: moderate the pace of any change in control of the Company, and better enable the Board of Directors to protect the interests of remaining shareholders in the event that another company should seek to acquire a controlling stock interest in the company. The annual shareholders meeting was held as scheduled on November 21, at which time the first proposal was adopted, despite Jewelcor’s opposition, and a nine-person board of directors was elected. The second proposal, requiring a two thirds vote for approval, did not come to a vote, since supporting proxies had only been received from the holders of 61 percent of Lafayette’s outstanding shares. Jewelcor would have voted against this proposal. Lafayette thus adjourned the meeting until December 26, believing that it might be approved at a later date, since the holders of only 77 percent of the outstanding shares of Lafayette had returned proxies on the second proposal by November 21. (Misc. Doc. 17). To solicit additional proxies in support of the second proposal, Lafayette sent a letter to its shareholders on November 27. The letter stated that “61% of your company’s shares have voted FOR adoption of Proposal 2,” although no vote had actually been taken. However, the letter also informed the Lafayette shareholders that approval of Proposal No. 2 required affirmative votes of 66% percent of the outstanding stock of Lafayette. In anticipation of the adjourned meeting, Jewelcor began soliciting proxies in opposition to Proposal No. 2 on December 6th, after obtaining clearance for its materials from the SEC. Jewelcor’s proxy materials echoed its Schedule 13D statement, indicating that it had bought Lafayette stock for investment purposes. Jewelcor’s proxy materials also informed shareholders that the funds for its purchases of Lafayette stock had come from cash generated from operations and that “no special borrowings” had been employed. (Holtzman Ex. 24, at 3; Complaint, Ex. D). On December 6th, Lafayette also sent out its own proxy materials in support of Proposal No. 2, informing its shareholders that Jewelcor “is now attempting to defeat the adoption of Proposal 2.” Additionally, Jewelcor began making oral solicitations of proxies through Georgeson & Co., a proxy-solicitation firm. In at least one telephone conversation conducted by Georgeson, the solicitor informed a Lafayette shareholder that Proposal No. 2 had been defeated on November 21, but that Lafayette’s management had scheduled another meeting for December 26 for a second vote on this proposal. The solicitor on that occasion also indicated that the majority had voted against Proposal No. 2. It is not clear to what extent other solicitors similarly informed Lafayette shareholdersJ Eleven days after the December 6 proxy materials were mailed by both Jewelcor and Lafayette, Lafayette commenced its action against Jewelcor, and sought expedited discovery that same day. This Court originally allowed expedited discovery, but agreed to a modified discovery schedule the next day after Lafayette had offered to postpone the shareholders meeting. Lafayette sent out another letter to its shareholders on February 10, informing them of its belief that Jewelcor “may be attempting to acquire control.” Shortly thereafter, the February 18 meeting was again adjourned, this time to March 25. During December, January and February, meanwhile, Pearlman had purchased 39,900 shares of Lafayette stock, bringing his ownership of Lafayette stock to more than five percent. Consequently, on March 2, he filed a Schedule 13D with the SEC. According to the Schedule 13D: The pendency of what Mr. Pearlman believes may be an attempt by Jewel-cor to acquire control of the Issuer coupled with the current price of the Issuer’s stock influenced Mr. Pearlman in purchasing the shares acquired in December, January, and February at those times. Mr. Pearlman also believes that his purchases in December, 1974, January and February, 1975 were desirable in order to insure continuity and stability in leadership and policy for the Issuer. Mr. Pearlman’s purchases will have the effect of making a change in the majority of the Board of Directors more difficult and will better enable him to protect the interests of the Issuer’s shareholders in the event that Jewelcor or any other person or company should seek to acquire control of the Issuer . . . Pearlman further indicated in his Schedule 13D statement that he might buy additional shares of Lafayette stock in the future, depending on market prices and his financial resources. Since March 2, Pearlman has not bought further shares of Lafayette stock, and since March 24, he, Lafayette’s officers and directors and Jeweleor’s officers and directors, have been enjoined from doing so. The Summary Judgment Motion Jewelcor has moved for summary judgment in Lafayette’s action against Jewel-cor, contending that there are no genuine issues of material fact, and that it is entitled to summary judgment as a matter of law, since its Schedule 13D and its proxy statements are not false and misleading. Section 13(d) of the Exchange Act, commonly known as the Williams Act, requires disclosure of certain information by persons acquiring five percent or more of the shares of a registered company in order to alert investors in such companies of relatively sudden accumulations of securities by any person or group, and to apprise invéstors of potential and actual changes in the conduct of the business or structure of ownership. See GAF Corp. v. Milstein, 453 F.2d 709, 717, 720 (2d Cir. 1971), cert. denied, 406 U.S. 910, 92 S.Ct. 1610, 31 L.Ed.2d 821 (1972). Regulation 13D consists of a series of specific rules promulgated by the SEC to implement the statute, and requires the filing of a Schedule 13D statement including information concerning the identity and background of the .person filing the statement, the source and amount of funds used to purchase the security, and the reasons for the purchase of the security. Lafayette alleges in its complaint that Jeweleor’s Schedule 13D statement is inaccurate because it misstates Jewelcor’s reasons for buying Lafayette stock, and because it misstates Jewelcor’s source of funds in its stock purchases. Lafayette further alleges that similar information contained in Jewelcor’s proxy solicitation materials is also false and misleading in violation of Section 14(a) of the Exchange Act. Jewelcor argues in support of its motion for summary judgment that its Schedule 13D has accurately stated its purpose for acquiring Lafayette stock as “investment.” Lafayette contends, however, that Jewelcor’s initial purchases of Lafayette stock were for the principal purpose of strengthening Jewelcor’s position in discussing a merger or other business combination with Lafayette’s management. Jewelcor disputes this contention, asserting that the record clearly demonstrates that it never bought Lafayette stock to strengthen its position with a view towards a business combination with Lafayette. In support of its position, Jewelcor cites its Schedule 13D statement which stated: “Although Jewelcor has considered the possibility of a future acquisition of control of the business of Lafayette, whether by means of a tender offer, merger or other business combination, open market purchases, private transactions or otherwise, Jewelcor has not made any definitive' plans to attempt to acquire control of Lafayette . . .. .” Jewelcor also notes that the minutes of its board of directors meeting of August 26, 1974 reflect that its president, Seymour Holtzman, “could not recommend that the board definitively determine whether or not to seek control of Lafayette Radio,” at least until after he had met with Pearlman. (Block Aff., Ex. C). Similarly, on August 26, the Jewelcor directors resolved that beyond acquiring a specified additional amount of stock, “that no definitive acts be undertaken whereby the Company seeks control of Lafayette Radio Electronics Corporation.” Finally, Je'welcor’s president has stated categorically in an affidavit in connection with this motion that “Jewelcor has never made a decision to seek control of Lafayette. In fact, Jewelcor has never drafted any papers, sought financing or taken any other steps to prepare to seek to obtain control of Lafayette.” (Holtzman Aff., at 8). Lafayette claims that'these facts fail to indicate Jewelcor’s real purpose. in buying Lafayette stock. Lafayette stresses that Jewelcor’s board minutes of June 26, 1974 evince a management plan to form a business combination with Lafayette. Those minutes describe as part of “management’s tentative plan” that “a meeting would be arranged to determine whether or not an amicable tender could be accomplished. If it could, Jewelcor would proceed to develop a specific proposal with specific financing aimed at accomplishing the acquistion of control.” Those minutes also state that if a friendly tender were not possible, then Jewelcor would liquidate its holdings in Lafayette. Lafayette argues that this statement is convincing evidence that Jewelcor’s purpose was not investment but developing a business combination with Lafayette. Lafayette also maintains that Jewelcor’s purpose was described accurately by Jewelcor’s general counsel Eugene Roth when he recalled that Unterberg had said at the August 26 Jewelcor directors’ meeting that one purpose for further investment in Lafayette stock was that “it would give us a greater standing in meeting with Mr. Pearlman . . .,” Lafayette’s president. (Roth Dep. 31-32). This statement clearly shows that Jewelcor was investing in Lafayette so that it would be in a strong position to discuss a business combination, Lafayette contends. Additionally, Lafayette maintains that Jewelcor’s purposes were clearly evidenc-' ed in August, 1974, when Jewelcor’s president, Seymour Holtzman, asked Towbin to arrange a meeting with Pearlman to discuss Jewelcor’s possible interest in a merger. Shortly thereafter, Towbin and Unterberg met with Pearlman and informed him that Jewelcor would like to meet with Lafayette to discuss a possible business combination and that such a meeting might make sense, inasmuch as Jewelcor was a large stockholder in Lafayette. Similarly, Lafayette challenges the accuracy of Jewelcor’s citations from the minutes of 'its August 26 directors’ meeting. Lafayette points to a passage that indicates that the Jewelcor board approved additional purchases of Lafayette stock because they “would place [Jewel-cor] in a stronger position in its discussions with Mr. Perlman [sic].” (Holtzman Aff. ¶ 6). We conclude on the basis of this evidence that there is a genuine factual issue as to whether Jewelcor’s Schedule 13D statement misstated Jewelcor’s investment purposes. We find that there is credible evidence tending to show that Jewelcor adequately described its interests in a possible business combination with Lafayette, and that there is also credible evidence tending to show the contrary. We thus deny Jewelcor’s motion for summary judgment on this point. Jewelcor also moves for summary judgment on the ground that its Schedule 13D was completely accurate in stating that the source of its funds for purchasing Lafayette stock was “general assets and working capital.” Jewelcor concedes, as it must, that it had extensive borrowings during 1974. However, it denies that the Lafayette stock was purchased with funds obtained from bank loans. (Holtzman Aff. f[ 20). Instead, it maintains that the Lafayette stock was purchased from general funds derived from all of Jewelcor’s operations, which produced cash receipts of $81 million and a net profit exceeding $4 million in the fiscal year ending January, 1974. Lafayette has more than adequately responded to these assertions. It points out that it is the fiscal year ending January 31, 1975, which is relevant here, and that during that fiscal year substantially all of Jewelcor’s net operating profits were wiped out in connection with another business venture. Lafayette also argues that available cash, not receipts, must be used to purchase stock, and that if Jewelcor had not borrowed any funds, it would not have been able to purchase any stock. We find that Lafayette’s evidence on this point is sufficient to defeat Jewelcor’s motion for summary judgment on this point. Jewelcor next moves for summary judgment on the ground that its Schedule 13D was not misleading in failing to disclose that it had obtained confidential information regarding Lafayette from Unterberg, Towbin, the investment banking firm. Although Unterberg, Towbin had earlier performed services for Lafayette (Towbin, 7), since 1968 there has been no business relationship between them, according to Lafayette’s own president. (Pearlman, 92). The only information since 1968 which Jewelcor received from Unterberg, Tow-bin concerning Lafayette was a report prepared for Unterberg, Towbin’s brokerage customers last summer. This report was based solely on public information. These facts are not disputed by Lafayette. We thus find that Jewel-cor’s Schedule 13D was not misleading in this regard, and grant summary judgment for it on this point. Moreover, we find that Schedule 13D does not require the disclosure of such information in any event. Jewelcor also seeks summary judgment on the ground that its Schedule 13D was not misleading in failing to disclose purported merger discussions between Holtzman and Pearlman, and that Lafayette had rejected any possibility of a merger. We grant summary judgment for Jewelcor on this point, since nowhere is it required in Schedule 13D that a purchaser of securities report on any merger discussions. Moreover, any specific interest of the purchaser in merger presumably would be reported under Item Four of Schedule 13D, requiring a statement of the reasons for the purchase of securities. Jewelcor additionally moves for summary judgment on the ground that its Schedule 13D was not false in failing to state that Jewelcor definitely would purchase additional shares of Lafayette stock. Jewelcor contends that it never had any definite plans to acquire additional shares of Lafayette, and, moreover, that any purchase by it of Lafayette stock after it filed its Schedule 13D was dependent on market conditions. (Holtzman Aff., ¶ 17). While Lafayette has vigorously disputed Jewelcor’s assertions regarding the purposes of its purchases, it has not presented any evidence demonstrating that Jewelcor had a definite intent to purchase additional shares of Lafayette stock after it filed its Schedule 13D statement. Accordingly, we grant summary judgment for Jewelcor on this point. Jewelcor next seeks summary judgment on the ground that its Schedule 13D was not faulty for failing to disclose that its stock was held in a nominee name in a custody account at the First National Bank of Chicago. Jewelcor concedes that its stock was held in a nominee name but maintains that this is a common practice among financial institutions to more efficiently handle custody accounts. (Kamerlander, 11-12). We grant summary judgment for Jewelcor on this point, since we find as a matter of law that this information was not required under either Items five or six of Schedule 13D. Section 14(a) of the 1934 Act requires full and accurate disclosure of all material facts in any proxy solicitation materials. Lafayette alleges in its complaint that Jewelcor violated this section when it solicited proxies last December in opposition to Proposal No. 2, an amendment to Lafayette’s certificate of incorporation scheduled to be voted on at the adjourned shareholders meeting. Jewelcor now moves for summary judgment on the ground that none of the information in its proxy materials (Holtzman Ex. 24) was false or misleading. Much of the material in these proxy materials is similar to the information in Jewelcor’s Schedule 13D. Thus, the proxy .materials echo the Schedule 13D language in stating that Jewelcor bought its Lafayette shares for purposes of investment. Since we found that there is a genuine issue of fact as to whether that assertion was accurate, we also must find that there is a genuine issue of fact as to whether that statement of Jewelcor’s purpose was false and misleading in violation of § 14(a) and the SEC rules and regulations promulgated thereunder. Accordingly, we deny Jewelcor’s summary judgment motion on this point. Jewelcor’s proxy statement stated that the funds used to purchase Lafayette stock came from cash generated from operations and that no “special borrowings” were utilized. We have found that Jeweleor’s Schedule 13D with respect to its source of funds presents a genuine issue of fact; we also find that Jewelcor’s proxy statement presents a genuine issue of fact here, since there is conflicting evidence as to whether that statement is misleading. Jewelcor additionally seeks summary judgment on three points that are alleged in Lafayette’s complaint and relate only to proxy materials. First, Jewelcor seeks summary judgment on the ground that its proxy materials were not false or misleading in failing to state that Jewelcor had formulated a plan to take control of Lafayette. This point is closely connected to the issue discussed above regarding Jewelcor’s purpose in buying Lafayette stock. Since we have denied summary judgment on that issue, we must deny it here. Second, Jewelcor asks for summary judgment on the ground that its proxy materials were not false or misleading in failing to state that Jewelcor would have supported the second proposal at the Lafayette shareholders meeting if it had been offered a position on Lafayette’s board of directors. Jewelcor supports this point by a declaration of its president that Jewel-cor never had any interest in a Lafayette directorship and by an admission by Lafayette’s president that no one at Jewelcor ever requested a seat on Lafayette’s board of directors. (Pearlman, 197). Lafayette does not dispute this evidence. Consequently, we hold that Jewelcor is entitled to summary judgment on this item. Third, Jewelcor requests summary judgment on the ground that it did not wrongfully fail to disclose that its Lafayette stock was held in a custody account in a nominee name. Lafayette argues that such disclosure was required pursuant to Item 5(f) of Schedule 14A, which calls for disclosure of “any contractual arrangements . the operation of the terms of which may at a subsequent date result in a change in control of the issuer.” Since Jewel-cor’s custody arrangement could not result in a change in control of the issuer, this section is inapplicable, and Jewel-cor is entitled to prevail here on its summary judgment motion. The final issue on this summary judgment motion is whether the oral proxy solicitations conducted by a proxy soliciting firm on behalf of Jewelcor were false and misleading. As indicated above, at least one proxy solicitor stated to a Lafayette shareholder that Proposal No. 2 had been defeated by a majority of Lafayette’s shareholders. In fact, no vote had been taken on Proposal No. 2, and a majority of Lafayette’s proxies supported it. Thus, it is hard to understand how Jewelcor could expect to prevail on a summary judgment motion on this point. At the very least, the available evidence suggests rather strongly that at least some of the oral solicitations were false if not misleading. Accordingly, we deny Jewelcor’s motion with respect to this item. Lafayette’s Preliminary Injunction Motion The standard to be applied in determining whether a preliminary injunction should be granted is: a clear showing of either (1) probable success on the merits and possible irreparable injury, or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief. Sonesta International Hotels Corp. v. Wellington Assoc., 483 F.2d 247, 250 (2d Cir. 1973). But see Sampson v. Murray, 415 U.S. 61, 88, 94 S.Ct. 937, 39 L.Ed.2d 166 (1974). Since we find, for the reasons discussed below, that plaintiff Lafayette has failed to meet either standard, its motion for preliminary injunctive relief is denied. On this motion, Lafayette seeks to enjoin Jeweleor from acquiring additional shares of Lafayette stock, voting its Lafayette stock except in favor of Proposal No. 2 at the adjourned shareholders meeting, and soliciting proxies or consents from shareholders in opposition to Proposal No. 2. The issues here are basically the same as on the summary judgment motion—viz. whether Jeweleor’s Schedule 13D is accurate and whether its proxy materials were false and misleading in violation of § 14(a) of the Exchange Act. Alleged Violations of Schedule 13D Item 4 of Schedule 13D requires purchasers of more than five percent of the securities of a company to: [sjtate the purpose or purposes of the purchase or proposed purchase of securities of the issuer. If the purpose or one of the purposes of the purchase or proposed purchase is to acquire control of the business of the issuer, describe any plans or proposals which the purchasers may have to liquidate the issuer, to sell its assets or to merge it with any other persons, or to make any other major change in its business or corporate structure . . .. Lafayette’s primary contention is that while this item of Schedule 13D calls for disclosure of the purchaser’s plans and purposes, Jeweleor has failed to describe accurately its purposes. Jewelcor’s purposes, according to Lafayette, were investment and strengthening its position in anticipation of discussions regarding a business combination with Lafayette. According to Lafayette, Jewelcor’s Schedule 13D was inaccurate since it stated that it was buying Lafayette stock “for purposes of investment.” Jeweleor contends that its Schedule 13D must be viewed as a whole, without isolating its statement that it bought Lafayette stock for investment purposes. We agree with Jeweleor. It seems to us that Lafayette is making too much of the distinction between plans and purposes, especially since both subjects must be discussed in the same item of Schedule 13D. Schedule 13D requires a statement of the plans of the purchaser if and only if one of the purposes of the purchase is “to acquire control of the business of the issuer.” Thus, Jewelcor’s statement that it had considered possible business combinations with Lafayette necessarily implied that one of the reasons it had bought Lafayette stock was the formation of some kind of business combination with Lafayette. Whether its statement was accurate in this context must be considered in light of the purposes of disclosure under § 13(d). The Second Circuit has noted that: section 13(d) was intended to alert investors to potential changes in corporate control so that they could properly evaluate the company in which they had invested or were investing. Disclosure which is false or misleading subverts this purpose. GAF Corporation v. Milstein, 453 F.2d 709, 720 (2d Cir. 1971), cert. denied, 406 U.S. 910, 92 S.Ct. 1610, 31 L.Ed.2d 821 (1972). See also Comm. for New Management of Butler Aviation v. Widmark, 335 F.Supp. 146, 154 (E.D.N.Y.1971); Comment, Section 13(d) and Disclosure of Corporate Equity Ownership, 119 U. Pa.L.Rev. 853, 854 (1971). The basic question, then, is whether the information in Jewelcor’s Schedule 13D would fairly apprise investors of potential changes in Lafayette’s corporate control. We are inclined to believe that it does, although we realize there is contrary evidence. There can be little doubt that Lafayette’s shareholders were adequately informed about possible courses of action Jewelcor had considered and its purpose or purposes in purchasing Lafayette stock. Moreover, Jewelcor might well have been guilty of violating § 13(d) had it specifically stated that one of its purposes for purchasing Lafayette stock was furthering Jewelcor’s interest in merging with Lafayette, if such option were in fact only a possibility. In this context, we find controlling the following language of the Second Circuit in discussing the “plans or proposals” ■ language of Item 4: The person or corporation filing a Schedule 13D statement need not necessarily walk a tortuous path. He must, of course, be precise and forthright in making full and fair disclosure as to all material facts called for by the various items of the schedule. At the same time he must be careful not to delineate extravagantly or to enlarge beyond reasonable bounds. The securities market is delicately arranged and needs only slight impetus to upset it. As Judge Friendly has pointed out . . ., “It would be as serious an infringement of these [SEC] regulations to overstate the definiteness of the plans as to understate them.” Electronic Specialty Co. v. International Controls Corp., 409 F.2d 937, 948 (2d Cir. 1969). * * * Though the offeror has an obligation fairly to disclose its plans in the event of a takeover, it is not required to make predictions of future behavior, however tentatively phrased, which may cause the offeree or the public investor to rely on them unjustifiably . . . . Target companies must not be provided the opportunity to use the future plans provision as a tool for dilatory litigation. Susquehanna Corp. v. Pan American Sulphur Co., 423 F.2d 1075, 1085-86 (2d Cir. 1970). Lafayette argues that Gulf & Western Indus. v. Great Atlantic & Pacific Tea Co., 476 F.2d 687 (2d Cir. 1973), supports the proposition that Item 4 of Jewelcor’s Schedule 13D statement is inaccurate. We believe Lafayette’s reliance on this case is misplaced. In Gulf & Western, the court found that Gulf & Western’s Schedule 13D violated § 14(e) of the Securities and Exchange Act of 1934 in stating that it had bought A&P stock for investment purposes and in failing to disclose its intent to acquire a controlling interest in A&P or at least to exercise influence over A&P’s management and policies. The court found that “[a]ny of the tendering shareholders who did not tender all of their A&P holdings to G&W would be influenced in their decision whether or not to tender by the fact that G&W would eventually control or substantially influence the operations of A&P.” 476 F.2d at 696. The court rested its decision on G&W’s “well-established practice” of eventually acquiring firms in which it initially purchased only a small percentage of the outstanding shares, on a finding that G&W’s commitment to purchase A&P shares was the largest in its history, and on a finding that A&P stock, according to Gulf & Western’s president, did not constitute a good investment. In the instant case, the situation is somewhat different. Although Jewelcor has acquired other firms in the past, it has not made any acquisitions since 1972, and it has never acquired a publicly held corporation. Moreover, while this case is similar to Gulf & Western in that Jewel-cor had never previously purchased such a large block of stock in another company, it is different in that there is evidence that Jewelcor did consider its purchases of Lafayette stock a good investment. Finally, as we have already noted, Jewelcor indicated in its Schedule 13D that it was considering different forms of business combination with Lafayette, whereas Gulf & Western did not indicate that it intended to acquire a controlling interest in A&P or exercise influence over its management and policies. Lafayette also places reliance on Loews Corp. v. Accident & Cas. Ins. Co. of Winterthur, 74 Civ. 1396 (N.D.Ill.1974). In Loews, the defendant filed a Schedule 13D stating that its purpose for buying stock was investment and to preserve its historic relationship with the insurance subsidiaries of the issuing company. The court found that this statement violated Schedule 13D since it did not disclose that the defendant’s primary purpose was to stop, frustrate or discourage a tender offer for shares of the issuer by any company not acceptable to it. Slip Op., at 8. Lafayette argues that just as Winterthur had not disclosed that its purpose was to discourage a tender, Jewelcor has failed to disclose that the purpose of its purchase was to encourage a merger. We believe that Lo,ews is distinguishable. In that case, the defendant’s president had stated publicly that the defendant’s purpose was to discourage a tender. Slip Op., at 5. Here, by contrast, there is no evidence that Jewelcor had announced publicly at any time that it was seeking to encourage a merger. There is some evidence tending to show that Jewelcor was interested in a merger, but there is no evidence as in Loews that Jewelcor had stated publicly its unqualified intention in terms conflicting with its Schedule 13D. On this record, we do not think that Lafayette has demonstrated a probability of success on this issue at a trial on the merits so as to warrant the issuance of a preliminary injunction. Nor do we find “these issues so difficult and doubtful as to tip the balance of hardship toward [Lafayette] and thus warrant the issuance of an injunction . . . .” Gulf & Western Ind. v. Great Atlantic & Pacific Tea Co., 356 F.Supp. 1066, 1072 (S.D.N.Y.), aff’d 476 F.2d 687 (2d Cir. 1973). Lafayette’s next contention is that Jewelcor’s Schedule 13D was inaccurate in stating that it purchased Lafayette stock from its “general assets and working capital.” Section 13(d)(1)(B) provides that any person who is directly or indirectly the beneficial owner of five percent of any registered security must disclose: The source and amount of the funds or other consideration used or to be used in making the purchases, and if any part of the purchase price or proposed purchase price is represented or is to be represented by funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding, or trading such security, a description of the transaction and the names of the parties thereto . . . A similar requirement is contained in Item 3 of Schedule 13D. Lafayette urges that Jewelcor’s Schedule 13D was inaccurate because it failed to state that Jewelcor had bought Lafayette stock with funds obtained from bank loans extended to Jewelcor for working capital purposes through existing lines of credit. These omissions are significant, Lafayette argues, because such information might persuade prospective sellers to buy or prospective buyers to sell, depending on the financial picture such information might reveal. Lafayette further argues that Jewelcor’s statement is misleading because it suggests that Jewelcor was in a robust financial condition and able to afford nearly $1 million out of its working capital for stock purchases. In fact, Lafayette contends, Jewelcor’s financial picture was somewhat bleak. Jewelcor was ostensibly borrowing funds at an all-time high rate, and without these borrowings would have been unable to operate its business, much less purchase almost $1 million of Lafayette stock. Lafayette raises the specter that: If Jewelcor’s sketchy disclosure of the source of funds is found to be sufficient, henceforth Section 13(d)(1)(B) could be effectively emasculated merely by arbitrarily labelling all borrowings as having been incurred for nonstock purchases. The prospective stock purchaser would need only apply to a bank for working capital funds, pool the money with general revenues and then declare that it is using other available funds for purchasing the stock. (Lafayette Brief in Support of Preliminary Injunction Motion, at 91). Jewelcor vigorously disputes Lafayette’s allegations. Jewelcor concedes that a portion of its working capital came from borrowed funds, but maintains that no borrowings were obtained for the purpose of acquiring Lafayette securities. According to Jewelcor, Section 13(d) only requires disclosure of borrowings obtained for the specific purpose of purchasing stock, and since its borrowings allegedly do not fall within that category, it was not required to include information about its bank loans in its Schedule 13D. Jewelcor supports this argument by a declaration of its financial vice president that he did not take into consideration Jewelcor’s stock purchases when determining how much he would draw on Jewelcor’s lines of credit. (Litehman Aff., ¶ 23). Jewelcor also disputes Lafayette’s contention that its borrowings enabled it to purchase Lafayette stock. Jewelcor asserts that it could have spent the same amount for stock by reducing its payments for trade payables, and correspondingly reducing its borrowings by an equivalent amount. Without going into a lengthy analysis, we find this argument plausible in light of Jewelcor’s statement that it voluntarily increased its payments for trade payables in order to take advantage of substantial discounts offered by its vendors. (Litehman Aff., ¶ 21). Jewelcor disagrees with Lafayette’s' contention that nondisclosure of its borrowings for working capital was merely a device to circumvent the disclosure requirements of Section 13(d) (1) (B). On the contrary, Jewelcor argues, if Lafayette’s statutory interpretation is correct, Jewelcor would be required to disclose “any and all borrowings, . regardless of the purpose . . . ” (Jewelcor Brief in Opposition to Preliminary Injunction Motion, at 80). Such a requirement was not intended by the drafters of the statute, according to Jewelcor, since the statute is concerned about specific loans used to finance tender offers, not general corporate financings. See generally Note, The Courts and the Williams Act: Try a Little Tenderness, 48 N.Y.U.L.Rev. 991, 1000 (1973). And, Jewelcor says, it was not deficient in this regard since it specifically stated in its Schedule 13D that “any future decision by Jewelcor to acquire control of Lafayette by means of cash purchases of shares might also depend upon Jewelcor’s ability to obtain necessary bank or other financing on terms satisfactory to Jewelcor.” Finally, Jewelcor disagrees with Lafayette’s contention that it is a “debt-laden” company in poor financial condition. Rather, it maintains that it is in a very strong financial position, as evidenced by reports from the First National Bank of Chicago, Dun & Bradstreet, and the National Credit Service. (Litehman Aff., ¶¶ 4, 10, Exs. B, D, E). Jewelcor also justifies its increase in short-term debt from $2.3 million in January, 1974 to some $9.8 million in January, 1975 by noting that it did so in exchange for reducing its trade payables by almost an equivalent amount to take advantage of trade discounts by vendors. Jewelcor also points to an absence ' of funds from public offerings present in previous years, a need for increased inventory due to the opening of additional showrooms, and a desire to take advantage of easily available credit at banks which had served as depositories for Jewelcor’s accounts receivable as explanations for its sudden rise in borrowings. We conclude on the basis of this evidence that plaintiff has demonstrated a likelihood that it will succeed on the merits at trial. We are not persuaded by Jewelcor’s explanation that its loans were not necessary for its purchase of Lafayette stock. We find it likely that Lafayette will be able to show at a trial on the merits that Jeweleor was not in relatively good financial condition in 1974 and that at least some of its borrowings were for the purpose of acquiring Lafayette stock. However, we do not find that the balance of hardships in denying injunctive relief here is such that Lafayette will be unduly harmed by a denial of injunctive relief. This is not a tender offer or a merger where the denial of a preliminary injunction will make it difficult to “unscramble the eggs” if relief is finally given to the party seeking the injunction. Sonesta Int’l Hotels Corp. v. Wellington Assoc., supra, 483 F.2d at 250 (citations omitted). Rather, the denial of injunctive relief here will only mean that Jeweleor would be able to vote its shares and proxies against Proposal No. 2, which does not fundamentally affect the nature of Jewelcor’s business operations or management. In addition, while the denial of injunctive relief will permit Jeweleor to purchase further shares of Lafayette, when and if Jeweleor does decide to make a tender offer or does plan a merger, such future purchases will not immediately affect Lafayette, since' Jewel-cor will be obligated to disclose any changed intentions in a subsequent Schedule 13D. _ Alleged Violations of Section 14(a) Lafayette also seeks preliminary injunctive relief on the ground that Jewelcor’s proxy statement in opposition to Proposal No. 2 is false and misleading in violation of § 14(a) of the 1934 Act for essentially the same reasons it claims that Jewelcor’s Schedule 13D is inaccurate. Under Rule 14a-9 of the 1934 Act: No solicitation subject to this regulation shall be made by means of any proxy statement, form of proxy, notice of meeting or other communication, written or oral, containing any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statement therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading. The Second Circuit has described the test for determining the materiality of a fact as “whether, taking a properly realistic view, there is a substantial likelihood that the misstatement or omission may have led a stockholder to grant a proxy to the solicitor or to withhold one from the other side, whereas in the absence of this he would have taken a contrary course.” General Time Corp. v. Talley Indus., Inc., 403 F.2d 159, 162 (2d Cir. 1968), cert. denied, 393 U.S. 1026, 89 S.Ct. 631, 21 L.Ed.2d 570 (1969). See also Gerstle v. Gamble-Skogmo, 478 F.2d 1281, 1301-02 (2d Cir. 1973). With these standards in mind, we find that there is insufficient evidence to conclude that Jewelcor’s proxy statement misstates Jewelcor’s purpose in purchasing Lafayette securities. Since the language in Jewelcor’s proxy materials is almost identical to the language in its Schedule 13D, the reasons we expressed for denying Lafayette’s motion for a preliminary injunction apply equally here. In addition, we conclude that it will be difficult for Lafayette to prevail on the merits on the issue of Jewelcor’s purpose for purchasing Lafayette stock since in addition to the information in the Schedule 13D, Jewelcor also stated, “If Lafayette management’s 66%% note proposal is adopted, one of the effects could be to deter Jewelcor or any other company from attempting to acquire control of Lafayette.” This statement does not suggest that Jewelcor was seeking to conceal its motives during the proxy solicitation. However, we find that Lafayette is likely to prevail on the merits at trial regarding alleged misstatements concerning Jewelcor’s source of funds. The language in Jewelcor’s proxy materials is similar to the language in its Schedule 13D, but also states that it made no “special borrowings” to purchase Lafayette stock. Although this implies that Jewelcor did use some borrowings, we conclude that Lafayette likely will prevail on the merits on this point for the reasons set forth in our discussion of its Schedule 13D. Finally, Lafayette maintains the Jewelcor’s oral proxy solicitations were materially false and misleading, primarily on the basis of one taped oral solicitation in which a Jewelcor proxy solicitor incorrectly stated that Proposal No. 2 had been defeated and that a majority had voted against it. We believe that this one incident is insufficient to demonstrate a violation of § 14(a), and thus also deny Lafayette’s motion for a preliminary injunction on this ground. Balancing the Equities We have thus far expressed our view that Lafayette is likely to prevail on the merits on only some of its contentions. However, we decline to grant Lafayette injunctive relief, since we find that no irreparable injury will occur to Lafayette by a denial of its motion. As we noted above, a denial of its motion may result in the defeat of Proposal No. 2 and the purchasing of additional shares of stock by Jewelcor, neither of which bodes dire consequences for Lafayette, especially in the absence of a specific tender offer or proposed merger. Moreover, in balancing the equities, the hardships do not tip decidedly in favor of Lafayette. A denial of this motion will not have a serious detrimental effect on Lafayette. On the other hand, granting the motion may well cause a hardship to Jewelcor since Lafayette’s shareholders may very possibly view the injunction inaccurately as a final determination of wrongdoing on Jewelcor’s part, and thus thwart any future legitimate efforts by Jewelcor to form a business combination with Lafayette. See Comm. for a New Management of Butler Aviation v. Widmark, 335 F. Supp. 146, 152 (E.D.N.Y.1971); Sherman v. Posner, 266 F.Supp. 871 (S.D.N.Y.1966). The Motion to Dismiss The Lafayette directors bring this motion to dismiss against Jewelcor pursuant to Rule 12(b)(6), F.R.Civ.P. In its complaint Jewelcor charges the Lafayette directors with violations of §§ 13(d) and 14(a) of the Exchange Act similar to those in Lafayette's action against Jewelcor. Jewelcor also alleges, inter alia, that the Lafayette directors unlawfully manipulated the price of Lafayette stock and tortiously interfered with Jewelcor’s banking and business relationships. The instant motion seeks to dismiss five of the seven claims of Jewelcor’s amended complaint. In assessing the five claims before us on this motion, we need not reach the merits but must only determine whether Jewelcor might be entitled to relief under any state of facts which could be proved in support of the claim. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Jewelcor’s first claim alleges that defendants, acting with three other individuals, formed a group “for the purpose of perpetuating themselves in office and in opposition to all efforts to limit or restrict defendants’ control over Lafayette. . . .” (Complaint, |[ 14(d)). Jewelcor maintains that this group violated § 13(d)(3) of the Exchange Act in failing to file a Schedule 13D s