Menora Mivtachim Ins. Ltd. v. Frutarom Indus. Ltd., No. 21-1076 (2d Cir. 2022)
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International Flavors & Fragrances Inc. (“IFF”), a U.S.-based seller of flavoring and fragrance products, acquired Frutarom Industries Ltd. (“Frutarom”), an Israeli firm in the same industry. Leading up to the merger, Frutarom allegedly made material misstatements about its compliance with anti-bribery laws and the source of its business growth. Plaintiffs, who bought stock in IFF, sued Frutarom, alleging that those misstatements violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder.
The Second Circuit affirmed. The court held that Plaintiffs here lack standing to sue based on alleged misstatements about Frutarom because they never bought or sold shares of Frutarom. The court explained that Section 10(b) standing does not depend on the significance or directness of the relationship between two companies. Rather, the question is whether Plaintiff bought or sold the securities about which the misstatements were made. Here, Plaintiffs did not purchase the securities about which misstatements were made, so they did not have standing to sue under Section 10(b) or Rule 10b-5.
This opinion or order relates to an opinion or order originally issued on September 30, 2022.
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