(concurring and dissenting):
I concur in those results reached in Judge Timbers’ opinion which represent the majority opinion as to issues other than injunctive relief, except that I dissent from the reversal of the district court’s dismissal of CCI’s suit against the Piper family defendants.
I also concur in Judge Gurfein’s opinion to the extent that it represents the majority decision affirming the denial of injunctive relief.
With due respect for my brother Timbers’ exhaustive analysis of these complicated cases in his opinion (“main opinion” herein), I find myself in disagreement with some of his conclusions and reasoning. I would also limit our discussion to those legal principles necessary for adjudication of the issues presented rather than engage in unnecessary dicta in this sensitive area. The Supreme Court has urged that judicial construction of the anti-fraud provisions of the federal securities laws be limited to what is essential for the decision at hand:
“Although § 10(b) and Rule 10b-5 may well be the most litigated provisions in the federal securities laws, this is the first time this Court has found it necessary to interpret them. We enter this virgin territory cautiously. The questions presented are narrow ones. They arise in an area where glib generalizations and unthinking abstractions are major occupational hazards. Accordingly, in deciding this particular case, remembering what is not involved is as important as determining what is. With this in mind, we turn to respondents’ particular contentions.” SEC v. National Securities, Inc., 393 U.S. 453, 465, 89 S.Ct. 564, 571, 21 L.Ed.2d 668 (1969).
Several points discussed in Judge Timbers’ opinion, while interesting, strike me as both irrelevant to the issues and as a source of possible confu*396sion to readers. Other observations go much further than is necessary. With still others I must respectfully disagree. For these reasons I find it necessary to state my own differing views in this area. In doing so I shall follow the sequence of the main opinion.
Function of Private Damage Suits
I agree that the anti-fraud and anti-manipulation sections of the federal securities laws were designed to insure against distortion and falsity in the purchase and sale of securities, and that private damage suits based upon violation of those laws should be encouraged as a means of supplementing governmental action in the vigorous enforcement of those laws. See J. I. Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964); Fleischer, “Federal Corporation Law”: An Assessment, 78 Harv.L.Rev. 1146, 1172-79 (1965); Lowenfels, Implied Liabilities Based Upon Stock Exchange Rules, 66 Colum. L.Rev. 12; Lowenfels, Private Enforcement in the Over-the-Counter Securities Markets; Implied Liabilities Based on NASD Rules, 51 Cornell L.Q. 633 (1966). However, it is unrealistic and fanciful to suggest that through such suits “society can obtain the maximum amount of its preferred goods and services that our resources can produce.”
Full disclosure may go far toward achieving a fair and honest marketplace for trading of securities. But honesty cannot be equated with efficiency in the use of funds or assets realized from a public issue or tender offer. One need only look at the dockets of our federal district courts to appreciate that bankruptcies of honest entrepreneurs are all too common.
CCI’s Standing
With due respect for the views of the author of the main opinion, the issue before us is not whether “CCI has standing in a constitutional sense.” If that were the issue, it could be settled by a one-line reference to the Supreme Court’s decision in Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970). The issue is one of statutory construction: Does § 14(e) confer standing upon a defeated competitor for control to sue the successful party for damages based on its violation of the anti-fraud provisions of the securities acts?
The federal securities laws are silent on the subject of a private party’s standing to sue. Indeed, neither § 14(e) nor § 10(b) or Rule 10b-5 state that purchasers, sellers, or exchangers of securities have the right to sue. However, their implied standing to sue has long since been judicially established, Kardon v. National Gypsum Co., 69 F.Supp. 512 (E.D.Pa.1946). I would recognize CCI’s standing solely on the ground that vigorous enforcement of the anti-fraud provisions through private litigation, J. I. Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964), calls for similar implication of a private right of action in favor of a defeated contestant against the successful bidder for control for damages caused by the latter’s violation of that section, see Crane Co. v. Westinghouse Air Brake Co., 419 F.2d 787 (2d Cir. 1969), cert, denied, 400 U. S. 822, 91 S.Ct. 41, 27 L.Ed.2d 50 (1970), especially in view of our willingness to permit the target corporation to seek relief against the offeror under § 14(e). Electronic Specialty Co. v. International Controls Corp., 409 F.2d 937 (2d Cir. 1969); Butler Aviation International Inc. v. Comprehensive Designers, Inc., 425 F.2d 842 (2d Cir. 1970).
Scienter
It is generally agreed in this Circuit that some form of scienter is required to support a private damage claim based upon a violation of Rule 10b-5, compare SEC v. Texas Gulf Sulphur Co., 401 F. 2d 833, 855, 863, 866-868 (Friendly, Ch. J., concurring) (2d Cir. 1968) (en banc), cert, denied sub nom. Kline v. SEC, 394 U.S. 976, 89 S.Ct. 1454, 22 L. Ed.2d 756 (1969), with Globus v. Law *397Research Service, Inc., 418 F.2d 1276, 1290 (2d Cir. 1969), cert. denied, 397 U.S. 913, 90 S.Ct. 913, 25 L.Ed.2d 93 (1970), and while less than the specific fraudulent intent required to prove common law fraud will suffice, mere negligence is not enough, Shemtob v. Shear-son, Hammill & Co., 448 F.2d 442, 445 (2d Cir. 1971).1 No reason has been advanced for a different standard in the enforcement of § 14(e), the language of which is substantially the same as that found in § 10(b) and Rule 10b-5.
In the present case, although an intent to defraud has not been shown, defendants’ conduct amounted to more than mere negligence. Our answer to the question of whether the proof was sufficient to satisfy the scienter requirement depends, therefore, upon the standard that is to govern the gray area between the extremes of specific fraudulent intent, on the one hand, and mere negligence) on the other. In my view that standard cannot be satisfactorily described in such abstract terms as “culpability,” a generality frequently associated with any blameworthy or even criminal conduct, see I Working Papers of the National Committee on Reform of Federal Criminal Laws 123 (July 1970), much less as “fraud,” “constructive fraud,” “bad faith” or various gradations of “recklessness.”
If there is to be a meaningful scienter standard, it should, if possible, be stated in more specific terms. Of course it might vary according to the existence of a fiduciary relationship, the burden of proof and the nature of the relief sought.2 It might also take into account the nature and duties of the corporate posts held by the defendants, whether they are insiders or outsiders, and whether they are active or inactive participants. See generally Mann, Rule 10b-5: Evolution of a Continuum of Conduct to Replace the Catch Phrases of Negligence and Scienter, 45 N.Y.U.L. Rev. 1206 (1970). However, if we are unable to state a standard with some degree of precision, we should frankly confess that the only method of describing the element of scienter is by illustration rather than by categorization or rule of general application. See, e. g., Bucklo, Scienter and Rule 10b-5, 67 Nw.U.L. Rev. 562, 568 (1972). Scienter, like obscenity, would then simply be something recognized when seen, but not otherwise definable. Cf. Jacobellis v. Ohio, 378 U.S. 184, 197, 84 S.Ct. 1676, 1683, 12 L.Ed.2d 793 (1964) (Stewart, J., concurring) (“I shall not attempt further to define the kinds of material. But I know it when I see it. .”). But I believe that an applicable scienter rule can be formulated and defined.
Congress’ use of the words “fraudulent,” “deceptive” and “manipulative” in § 14(e), when coupled with the partially similar language and the legislative history of the earlier-enacted § 10(b), indicates that its purpose was not to punish mere negligence, see S.Rep. 792, 73d Cong., 2d Sess. 6 (1934), Kohn v. American Metal Climax Inc., 458 F.2d 255, 79-280 (3d Cir. 1972) (concurring and dissenting opinion of Adams, J.), but that the law was aimed at misrepresentations or omissions involving some degree of awareness on the part of the corporate officer charged. If Congress had intended to impose absolute liability, subject to a “due diligence” or “good faith” defense, it could have used language similar to that found in § 11 of *398the 1933 Act. If, on the other hand, it had intended to limit liability to willful and intentional misrepresentation, it could have used language similar to that found in § 9(e) of the 1934 Act, 15 U. S.C. § 78i(e) (making liable any person who “willfully participates” in the sale of securities, inter alia, through use of materially false or misleading statements, § 9(a)(4)). The words “manipulative,” “deceptive,” and “fraudulent,” as applied to statements or omissions, seem to have been intended to have a meaning similar to that later ascribed to them by the Commission, which has defined misleading statements or omissions as those “made with knowledge or reasonable grounds to believe that [they are] untrue or misleading,” 17 C.F.R. § 240.15c l-2(b).
When §§ 10b and 14(e) are viewed against the entire background and purpose of the securities laws, the scienter requirement would be satisfied upon a showing that the person charged knew the material facts misstated or omitted and could reasonably have been expected to appreciate their significance, see Heit v. Weitzen, 402 F.2d 909, 914 (2d Cir. 1968), or, if he did not know them, that he had reasonable cause to believe that there might be a material failure in disclosure and yet did not ascertain and disclose the facts even though he could have done so without any undue effort. In short, the scienter requirement would be met if the corporate officer (1) knew the essential facts and failed to disclose them, or (2) failed or refused, after being put on notice of a possible material failure in disclosure, to apprise himself of the facts under circumstances where he could reasonably have ascertained and disclosed them without any extraordinary effort.
In keeping with the broad remedial aims of the anti-fraud provisions of the federal securities laws such a standard of responsibility, while requiring proof of more than mere negligence, would not permit top corporate officers and those aiding and abetting them to escape liability by pleading ignorance where it can be shown that red flags putting them on notice or providing warning signals of either undisclosed or misrepresented facts of a material nature were readily apparent to all and that a routine check would have disclosed the misrepresentation. Such a test would also serve to differentiate §§ 14(e), 10(b) and Rule 10b-5 and § 17(a) of the 1933 Act, 15 U.S.C. § 77q, see SEC v. Texas Gulf Sulphur, supra, 401 F.2d at 867 (Friendly, Ch. J., concurring), on the one hand, from other provisions of the securities acts, such as §§ 11, 12(1), 12(2), 15 U.S.C. §§ 77k, 771(1), (2), which impose upon persons charged the burden of proving “due diligence,” see Escott v. Barchris Construction Corp., 283 F.Supp. 643, 682-703 (S.D.N.Y. 1968).
Since the defendants in the present case had knowledge of the material facts misstated or omitted or had sufficient notice of possible misstatements' and could reasonably have ascertained the facts with a minimum of effort, the proof clearly satisfies the standard.
The majority opinion gives lip service to the foregoing test but adds a series of qualifications and characterizations that in my view are unnecessary and only serve to cast doubt upon the standard itself. The effect is to compound existing confusion as to the law in the area. Starting with the view that proof of scienter requires a showing of “culpability” the main opinion translates that term into “knowing or reckless failure” to ascertain and disclose those facts as to which the person sued has a “duty of disclosure.” With respect to the nature and extent of this duty, we are provided with uncertain and apparently conflicting guidelines. Although the duty is described as one which requires the corporate officer to “act reasonably in discovering facts material to the [exchange] offer,” ante at 369, that statement is promptly qualified by observations to the effect that “corporate officers have a reasonable area of discretion in determining how far to explore the facts and in deciding what facts need to be dis*399closed,” id., and that they must be allowed “considerable room” for such discretion, supra, n. 22. With these latter comments I must respectfully disagree. In my view the test of materiality which was adopted by this court in List, Heit and Texas Gulf Sulphur, remains an objective one. If the corporate officer has knowledge of facts that are material according to that test, he cannot in his discretion decide not to disclose them without facing liability under § 14(e).
Reliance
On the subject of what proof of reliance is required to establish causation, the Supreme Court has spoken definitively in Mills v. Electric Auto-Lite Co., 396 U.S. 375, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970), and in its sequel, Affiliated Ute Citizens v. United States, 406 U.S. 128, 92 S.Ct. 1456, 31 L.Ed.2d 741 (1972). In Mills minority shareholders of Electric Auto-Lite brought a derivative and representative class action challenging that, company’s merger with Mergenthaler Linotype Company on the ground that stockholders’ approval had been obtained by means of a materially misleading proxy statement in violation of § 14(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78n(a), and SEC Rule 14a-9. The alleged omission was the failure of defendants, who controlled 54% of Auto-Lite’s voting shares and needed a two-thirds majority for approval of the merger, to disclose th^t they were nominees of Mergenthaler. The district court’s award of summary judgment to the plaintiffs was reversed by the Court of Appeals on the ground that causation had not been established. The Supreme Court, in a characteristically lucid opinion by Justice Harlan, who spoke for a unanimous court, reversed the Court of Appeals, holding that where the “proxy solicitation itself, rather than the particular defect in the solicitation materials, was an essential link in the accomplishment of the transaction,” 396 U.S. at 385, 90 S.Ct. at 622, proof of actual reliance on the material misstatement or omission need not be adduced. This principle was later summarized by Justice Blackmun in Affiliated Ute Citizens, supra, as follows:
“Under the circumstances of this case, involving primarily a failure to disclose, positive proof of reliance is not a prerequisite to recovery. All that is necessary is that the facts withheld be material in the sense that a reasonable investor might have considered them important in the making of this decision. See Mills v. Electric Auto-Lite Co., 396 U.S. 375, 384 [90 S.Ct. 616, 621, 24 L.Ed.2d 593] (1970); SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 849 (CA2 1968), cert, denied sub nom. Coates v. SEC, 394 U.S. 976 [89 S.Ct. 1454, 22 L.Ed.2d 756] (1969); 6 L.Loss, Securities Regulation 3876-3880 (1969 Supp. to 2d ed. of Vol. 3); A. Bromberg, Securities Law, Fraud — SEC Rule 1 Ob-5, §§ 2.6 and 8.6 (1967). This obligation to disclose and this withholding of a material fact establish the requisite element of causation in fact. Chasins v. Smith, Barney & Co., 438 F.2d [1167] at 1172.” 406 U.S. at 153-154, 92 S.Ct. at 1472.
In short, whatever may have been our earlier views as to the necessity of adducing positive proof of reliance, see, e. g., Green v. Wolf Corp., 406 F.2d 291, 301 (2d Cir. 1968), cert. denied, 395 U. S. 977, 89 S.Ct. 2131, 23 L.Ed.2d 766 (1969), the gravamen of the offense is now the material misrepresentation itself, from which reliance by a reasonable investor may be inferred as a matter of law, thus rendering unnecessary proof of actual subjective reliance. The rational behind this doctrine is that it “will avoid the impraeticalities of determining how many votes were affected, and, by resolving doubts in favor of those the statute is designed to protect, will effectuate the congressional policy of ensuring that the shareholders are able to make an informed choice when they are consulted on corporate transactions.” 396 U.S. at 385, 90 S.Ct. at 622.
The main opinion, following the lead of Judge Adams in Kohn v. American *400Metal Climax Inc., 458 F.2d 255, 290 (3d Cir. 1972), construes Mills-Ute as creating a “presumption” of reasonable reliance “where it is logical to presume that reliance in fact existed.” I disagree with this interpretation of the Supreme Court’s decisions on the subject. At no point did that Court expressly or impliedly speak in terms of a “presumption.” Use of that term naturally raises further questions: Is the presumption to be conclusive or rebuttable? If rebuttable, should not BPC be given an opportunity in the present case to rebut the presumption by offering proof that the percentage of Piper shareholders who did not rely upon its alleged misrepresentations in tendering their shares was sufficient to enable BPC to achieve control? See Note, Causation and Liability in Private Actions for Proxy Violations, 80 Yale L.J. 107, 135-38 (1970).
In my view, unless reasonable reliance is found as a matter of law on the basis of the material misrepresentation, the Supreme Court’s purpose in Mills-Ute, which was to avoid the impracticalities of determining how many votes or decisions to tender were affected, would be undermined. The door would still be open to extensive discovery and protracted proceedings aimed at establishing subjective non-reliance. The Supreme Court’s decision not to remand for introduction of such proof in Mills or Ute indicates that it established a rule of law rather than a “presumption.” Moreover, Ute, which involved 10b-5 claims, refutes the distinction relied on by Judge Adams in Kohn, supra, 458 F.2d at 289, that different standards of reliance and causation may be applicable to claims under § 14(a) as opposed to those under § 10(b).
In the present case BPC needed all but approximately 1% of the 7% gained as a result of its exchange offer in order to achieve its 51% control. Proof of non-reliance by all but 1 % of the tendering Piper shareholders would be most unlikely. However, the main opinion^ ante at 373, by obligating CCI to “show that there was a misrepresentation upon which the target corporation stockholders relied and that this was in fact the cause of CCI’s injury” and by stating repeatedly that reliance will be “presumed,” virtually invites an application for rehearing and remand to try the issue of reliance. I would clarify that issue now.
For these reasons my concurrence is based simply upon the view that, according to the principles established by the Supreme Court in Mills and Ute, CCI has established reliance as a matter of law in the present case.
BPC’s Violations of Rule 10b-6 of the 193k Act
In its denial of preliminary injunctive relief this court held that BPC’s cash purchases of 120,200 Piper shares violated Rule 10b-6. Chris-Craft Industries, Inc. v. Bangor Punta Corp., 426 F.2d 569, 576-577 (2d Cir. 1970) (en bane). We there found Rule 10b-6 applicable to purchases of a target corporation’s shares since such purchases might have a bullish radiating effect upon a pending exchange offer.
I concur in the view that since BPC’s unlawful purchases of Piper shares enabled it to gain control of Piper, its conduct is actionable at the instance of CCI, which was thereby handicapped in its lawful competition for control. However, I cannot agree with the main opinion’s view that BPC’s purchases actually “operated in the market to make BPC’s exchange offer deceptively attractive.” There was no such proof. Nor do I accept the view that liability should be predicated upon the “presumption” that “Piper shareholders . . . were deceived” or that the “illegal purchases will substantially inflate” the price of the exchange offer. Unless the presumption were conclusive, BPC would be entitled to rebut it by offering proof that its cash purchases did not have any radiating effect upon the exchange offer.
For these reasons my concurrence is based solely on the ground that where a *401party acquires control of a target corporation through violation of applicable provisions of the securities acts and regulations promulgated thereunder (in this case Rule 10b-6), it is liable as a matter of law to a competitor for any damages caused by the illegal conduct.
The Piper Family Defendants
I concur in the conclusion that the Piper family defendants did not become liable to CCI by virtue of their participation in the May 8th press release announcing the BPC exchange offer. The statement of predicted value contained in the release was not a material representation since the specific terms were contained in the registration statement filed shortly thereafter and the actual value of the package appeared as soon as the exchange offer became effective. I therefore find it unnecessary to decide whether a reasonable investor would have construed the $80 promised value to refer to market price of the security or to an appraisal of BPC’s assets and earnings, or whether the archetypical investor should have been expected to make this differentiation from the bare words of the press release.
I also concur in the majority view that CCI has not proved its claim based upon the letters sent by the Piper family to Piper shareholders in June and July, 1969. Although these letters failed to mention the arrangement with BPC whereby the Piper family might gain a huge profit if BPC succeeded in acquiring control of the Piper Company, CCI promptly furnished the essential information to all Piper stockholders on June 16, 1969, before the BPC tender offer became effective. In view of the latter communication no reasonable investor would have accepted BPC’s tender offer, which went into effect on July 18, 1969, in reliance upon the Piper family letters.
I must dissent, however, from the majority’s failure to accord similar treatment to the claim based on the earlier letters written by the Piper family to Piper stockholders on January 27 and 28, 1969, and to the January 29 press release. I agree that these letters and press release were materially misleading and that a reasonable investor would have considered them important in deciding whether to accept or reject CCI’s cash tender offer. Under the Mills-Ute test positive proof of reliance was unnecessary to establish causation. However, proof of damages is a separate question and requires more. As the Supreme Court stated in Mills v. Electric Auto-Lite, supra, 396 U.S. at 388-389, 90 S.Ct. at 624:
“On the other hand, where, as here, the misleading aspect of the solicitation did not relate to terms of the merger, monetary relief might be afforded to the shareholders only if the merger resulted in a reduction of the earnings or earnings potential of their holdings. In short, damages should be recoverable only to the extent that they can be shown.” (Emphasis supplied)
Applying this principle, CCI must show that it suffered some resulting loss. This it has failed to do. In making the January cash tender offer it agreed to purchase up to 300,000 Piper shares if tendered by February 3, 1969, and the district court found that it was not seeking more. 304,606 shares were tendered and purchased by CCI. Thus CCI exceeded its goal. It got more shares than it agreed to buy. No loss was suffered. Indeed it publicly stated that the cash tender offer had been a success.
Although CCI reserved the right to purchase more than 300,000 shares, it did not have sufficient funds to purchase any significant amount in excess of 300,000. Nor had “financing for shares in excess of 300,000 been arranged. . . .” (Testimony of C. Leonard Gordon, CCI’s Vice-President and General Counsel). It is true that Mr. Gordon testified that Burnham & Co. would have provided additional financing if more than 300,000 shares had been tendered. However, the record shows conclusively that CCI’s *402chances of obtaining such a loan were negligible, due to a restrictive agreement in effect with its senior noteholders and the prohibitive cost of borrowing additional funds.
Under its agreement with its senior noteholders CCI had obligated itself not to have any unsecured current debt for bank loans in excess of a $15,000,000 revolving line of credit already obtained from the Philadelphia National Bank. The parties have stipulated that on February 3, 1969, the entire proceeds of this $15 million loan were received by CCI and used by it to pay for Piper shares received by it on its January 24, 1969, cash tender offer, which closed on the same date the loan proceeds were received. (App. 825A). By February 4, 1969, CCI had purchased 540,000 shares of Piper stock at a cost in excess of $30,000,000. Its cash resources were virtually exhausted. Yet it did not seek waivers from its senior noteholders to permit additional borrowing. Indeed, the parties have further stipulated that no resolution authorizing CCI to borrow money or obtain credit from any other source to purchase Piper stock was ever sought or adopted. (App. 284A).
The reason for CCI’s failure to seek additional loans was made clear by testimony of Mr. Woudhuysen, a partner of Burnham & Co., that the borrowing terms would have involved an 8%% interest rate plus the issuance of 22,500 CCI warrants, exercisable at the market price of CCI common stock, for each million dollars borrowed on a two-year loan. Thus if CCI should borrow $20 million on such a two-year loan the total cost of the money, calculated according to a commonly accepted formula, would have been a staggering 43.11%!
In summary, having “shot its bolt” in the financial sense by early February 1969 CCI was thereafter relegated in its quest for control of Piper to the use of exchange offers. It was in no position to purchase for cash any appreciable amount of Piper shares over and above the 304,606 tendered in response to its initial cash offer. Indeed, although additional Piper shares were available in the market after the expiration date of CCI’s tender offer, some at less than $65 per share,3 CCI purchased only 9,100 shares between February 3, 1969, and April 7, 1969, when the SEC advised it that such cash purchases during the pendency of its exchange offer (for which it had filed its Form S-l with the Commission on February 27, 1969, to become effective May 15, 1969) would violate Rule 10b-6. The record further reveals that although Herbert Siegel, Chairman of the Board of CCI, knew as early as February, 1969, that Cornfeld’s Fund of Funds Proprietary Fund, Inc. owned a large block of 78,600 Piper shares (later purchased by BPC), CCI made no effort to purchase it. Nor can CCI’s lack of pursuit of the substantial Cornfeld block be attributed to a hypothesized desire to avoid the expense of searching out and purchasing small blocks of shares, as the main opinion suggests.
By March 19, 1969, when the Grumman deal collapsed, any possible effect of the Piper family’s January 29, 1969, Grumman press release was completely dissipated, and by April 7, 1969, when the SEC took the position that further cash purchases were prohibited by Rule 10b-6, CCI could no longer claim that the January letters inhibited its purchase of Piper shares. By May 8, 1969, when BPC announced its tender package valued at $80, CCI could no longer contend that the Piper family’s statement that Piper shares were worth more than $65 per share was misleading. Nor is the main opinion’s fanciful assumption that the January letters “undoubtedly . influenced” Piper shareholders against accepting CCI’s later exchange offer by casting a general pall of unfair*403ness over CCI’s reputation anything more than rank speculation.
Dogged by its inability to obtain financing that would have enabled it to purchase available Piper stock for cash in competition with BPC, CCI’s efforts to obtain control by the cash offer route were doomed to failure. By the close of its second exchange offer on August 4, 1969, CCI owned 41% of Piper’s outstanding shares as compared with 45% owned by BPC. Thereafter it was BPC’s cash purchases in the open market of 100,614 shares, as compared with CCI’s capacity to buy only 29,200 shares, that won control for BPC.
Thus there has been a complete failure to show that the Piper family’s January letters and press release, which form the sole basis for the majority’s decision holding liable the Piper family defendants, caused any damage to CCI. The record is clear that the Piper communications, unlike the misleading statements in BPC’s exchange offer or BPC’s cash purchases in violation of Rule lob-6, did not deprive CCI of a fair opportunity to compete in the contest for control or enable BPC to win that contest.
In short, since the record shows that CCI did not suffer any damages as a result of the Piper family’s communications, I would affirm the dismissal of CCI’s claim against the members of that family.
First Boston and its Officers
Where an underwriter participates in an exchange offering by assisting in the preparation of the registration statement and prospectus and by lending its name to the offer, I agree that § 14(e) should be construed to impose upon him the same obligation as that imposed upon the issuer with respect to materially false or misleading statements or omissions, and that a damage suit should lie against the underwriter in favor of the competing bidder for control who suffered resulting damage. This conclusion is based solely upon the principle of implying liability as a means of promoting private enforcement of the antifraud provisions of the securities laws. See p. 396, supra. However, unlike the main opinion on this issue, I gain no assistance in reaching that decision from § 11(b) of the 1933 Act, 15 U.S.C. § 77k(b) or from the Senate Report accompanying § 14(e), S.Rep.No. 510, 90th Cong., 2d Sess. (1968), U.S. Code Cong. & Admin.News 1968, p. 2811.
Since § 11(b) expressly creates liability for materially misleading statements in a prospectus and then only in favor of purchasers of the security, I fail to find it of any help in implying liability under § 14(e) in favor of nonpurchasers. Indeed it could be argued that the very fact that Congress expressly delineated the scope of liability in § 11(b) militates against implying liability in § 14(e). As for the Senate Report accompanying § 14(e), I believe the authors would be startled to find that they had in mind underwriters such as First Boston Corp. when they referred generally to persons “engaged in making . tender offers or otherwise seeking to influence” the decision of investors with respect to such offers.
Injunctive Relief
I concur in the well-reasoned opinion of Judge Gurfein affirming the district court’s denial of injunctive relief against violation by BPC of the Securities Act of 1933, 15 U.S.C. § 77a et seq., and the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq. 331 F.Supp. 1154.
The dissent’s description of BPC’s conduct as “most flagrant,” its characterization of the district court’s action as an “abuse of discretion,” and its portrayal of our decision as a “mischievous precedent,” simply ignore undisputed contrary findings of fact, which are fully supported by more than ample credible evidence. Such comments sacrifice controlling evidence and governing legal principles to insatiable zeal for use of an unjustified remedy, all in the name of *404vigorous enforcement of federal securities laws.
A review of the claims, evidence and findings demonstrates the wisdom of allowing Judge Pollack’s decision denying injunctive relief to stand. The Commission’s claim was that BPC’s registration statement and prospectus were materially deficient because of an alleged failure to disclose that it had decided to sell BAR at a price some $13.4 million below the figure at which it was carried on BPC’s financial statements, and that BPC deliberately deferred the closing of the sale until its exchange offer was completed in order to avoid making the writedown that would be required if the sale were completed prior to or during the pendency of the offer. After receiving extensive proof on these issues, including the testimony of key witnesses who were personally observed and whose credibility was appraised by Judge Pollack, whose experience in the field of securities litigation at least matches if not exceeds that of this panel, he found that during the period when BPC’s registration statement and prospectus were in effect (i.e., from July 18, 1969 to August 27, 1969) no decision to sell had been made.4 However he further found that although there was no intent to mislead on the part of BPC in carrying BAR at $18.4 million on the balance sheet, that figure was obsolete to the point of being misleading and should have been qualified by reference to pending negotiations for sale at a substantially lower figure.5 These crucial findings, supported by substantial evidence, cannot be rejected by us.
“Our court is not disposed to overturn conclusions of the trier of facts which are based upon substantial evidence and upon a determination of the credibility of witnesses who have given conflicting versions of the facts. N.L.R.B. v. Chain Service Restaurant Employees, 302 F.2d 167, 171 (2 Cir. 1962); Wilson v. United States, 229 F.2d 277, 279 (2 Cir. 1956); Phelan v. Middle States Oil Corp., 220 F.2d 593, 598 (2 Cir.), cert, denied sub nom. Cohen v. Glass, 349 U.S. 929, 75 S.Ct. 772, 99 L.Ed. 1260 (1955). Moreover, where a trial has been had by a judge without a jury, the judge’s findings must stand unless ‘clearly erroneous.’ Fed.R.Civ.P. 52(a), 28 U.S. C.” Heyman v. AR. Winarick, Inc., 325 F.2d 584, 589 (2d Cir. 1963).
The dissent reluctantly concedes that the foregoing findings are supported by substantial evidence and confirms, in accordance with our decision in SEC v. Manor Nursing Centers, Inc., 458 F.2d *4051082, 1100 (2d Cir. 1972), that in deciding whether to grant the extraordinary remedy of injunctive relief the district judge is vested with “broad discretion,” which may be set aside only upon a clear showing of abuse of discretion. United States v. W. T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894, 97 L.Ed. 1303 (1953); SEC v. Culpepper, 270 F.2d 241, 249-250 (2d Cir. 1959); SEC v. Torr, 87 F.2d 446 (2d Cir. 1937); SEC v. Okin, 139 F.2d 87, 88 (2d Cir. 1943); SEC v. Universal Service Ass’n, 106 F.2d 232 (7th Cir.), cert. denied, 308 U.S. 622, 60 S.Ct. 378, 84 L.Ed. 519 (1939); SEC v. Pearson, 426 F.2d 1339 (10th Cir. 1970). However the dissent seeks to avoid these time-honored basic principles by suggesting that we may invoke a less stringent standard of review when the appeal is from denial of injunctive relief rather than from grant of such relief, relying upon NMU v. Commerce Tankers Corp., 457 F.2d 1127 (2d Cir. 1972), which dealt with relief against unfair labor practices. That case is clearly distinguishable and has no application here. There we expressly noted that in deciding whether injunctive relief pending final adjudication by the NLRB in unfair labor practice cases is appropriate under 29 U.S.C. § 160(0, “the role of the district court ... is not to determine whether there has in fact been a violation of the Act but rather to determine whether the Regional Director could have reasonable cause to believe that the unfair labor practice charged had been committed and that its continuation ought to be enjoined.” Id. at 1133 (emphasis in original). No such considerations control here, where a showing must be made that the person charged “is engaged or about to engage in any acts or practices which constitute or will constitute a violation,” 15 U.S.C. §§ 77t(b), 78u(e).
We have found no instance where the standard for review of unfair labor practice suits has been applied to a suit by the SEC. On the contrary, in affirming the denial of injunctive relief in a suit by the SEC, the Tenth Circuit has taken the opposite view:
“We are obliged to give great weight to the supported findings including the trial court’s conviction that appellee did not intend further participation in the stock brokerage business in which he had not engaged for over a year before the hearing. See S.E.C. v. Franklin Atlas Corporation, supra 171 F.Supp. at 718. While we are persuaded that certain findings were clearly erroneous, we cannot say that there is a showing of abuse of the trial court’s discretion in denial of the preliminary injunction and affirm that ruling.” SEC v. Pearson, 426 F.2d 1339, 1344 (10th Cir. 1970).
With respect to the contention that Judge Pollack applied an erroneous standard in determining whether an injunction should issue, we would be engaging in petty semanticism if we were to reverse his decision because of his use of the words “propensity or natural inclination” instead of the phrase “reasonable likelihood that the wrong will be repeated.” There is nothing magic about either phrase, as was recognized in SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1101 (2d Cir. 1972), where this court, referring to Judge Pollack’s use in this very case of the terms “propensity or natural inclination to violate the securities laws,” said: “In relying upon our decision in Texas Gulf Sulphur, which applied the reasonable likelihood standard, the district court demonstrated that it was not purporting to apply a new standard for the issuance of an injunction.” I am not persuaded by the dissent’s present attempt to explain away this earlier view of the standard adopted by Judge Pollack. Although there is a slight difference between the two clauses, both express substantially the fundamental condition precedent to the issuance of the extraordinary remedy of a permanent injunction, i.e., that there must be a showing of a cognizable risk of future violation, something “more than the mere possibility which serves to keep the case alive.” United States v. *406W. T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894, 898, 97 L.Ed. 1303 (1953).6
Nor was injunctive relief denied merely because of lack of wrongful intent. Judge Pollack expressly recognized (supra n.5) that absence of bad faith or of an intent or purpose to violate the securities laws will not necessarily excuse the defendant and that an evil intent need not be shown to grant relief. But the lack of such intent is an important factor to be considered by the court in assessing the risk of future violations. One who intentionally violates the law or shows a willful disregard for it is usually a poorer risk than one who acts without a full appreciation for the seriousness of his conduct. In addition, however, the court must weigh all of those considerations which have been the traditional concern of the courts of equity, including the nature and extent of past violations, the effect on the public interest, and the impression on the trial judge made by the defendants who testified. SEC v. Harwyn Industries Corp., 326 F.Supp. 943, 955-958 (S.D.N.Y. 1971).
The $18.4 million ascribed to BAR as “stated book value” on BPC’s financial statements was an obsolete and hence misleading figure in view of pending negotiations for sale of the railroad at a much lower price. Some caveat or reference to the negotiations was required. However, I cannot agree that BPC’s failure to furnish additional data was “flagrant.” This characterization ignores the fact that under generally accepted accounting principles “stated book value” may properly be used in a financial statement and is not viewed in the financial world as the equivalent of market value. A person able to read a balance sheet would probably have recognized that such “historical” cost did not necessarily represent current liquidating value. Furthermore, to write down the figure immediately to $5 million might have been treated by the SEC as speculative and possibly misleading, in view of the other forms of disposition of BAR that were still under consideration.
The other alleged “past violation” chargeable against BPC — that its May 8, 1969 press release constituted an offer to sell before any registration statement had been filed — constituted at most a technical violation. BPC filed its registration statement and preliminary prospectus shortly after the May 8th release and in consenting to a permanent injunction it did not admit any of the allegations of the complaint filed against it in the District Court for the District of Columbia.
Nor can I agree that BPC should be singled out for special injunctive treatment because it is a conglomerate. There is no evidence to support the view that it has “long been interested in new acquisitions” or that it will “become involved in similar tender offers in the future.” We are not concerned here with a eoi’porate behemoth of the size of ITT but with a corporate venture of relatively modest size. Even if BPC should become interested in further lawful acquisitions for what it conceives to be sound economic reasons, the totality of the circumstances do not indicate any likelihood that it will engage in further violations of the securities acts.
Aside from the foregoing factors I am convinced that a judgment which (1) awards compensatory damages to CCI, (2) bars BPC from voting its illegally acquired Piper shares, and (3) awards rescission to former Piper stockholders who exchanged their shares in response to BPC’s tender offer, amply protects the public interest and insures against any reasonable likelihood that BPC will engage in similar conduct in the future.
The relief granted is bitter medicine which will be far more effective than a *407blanket injunction in deterring infraction of the law.
. See VI L. Loss, Securities Regulation 3883-88 (Supp. to 2d ed. 1969).
. IVe have indicated that the scienter requirement in suits for injunctive relief may be less strict than that in damage actions. Mutual Shares Corporation v. Genesco Inc., 384 F.2d 540, 547 (2d Cir. 1967) ; SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 863 (per Waterman, J.), 866-868 (Friendly, J., concurring) (2d Cir. 1968), cert, denied sub nom. Kline v. SEC, 394 U.S. 976, 89 S.Ct. 1454, 22 L.Ed.2d 756 (1969) ; SEC v. Great American Industries Inc., 407 F.2d 453, 463 (2d Cir. 1968) (en banc), cert. denied, 395 U.S. 920, 89 S.Ct. 1770, 23 L.Ed.2d 237 (1969) (concurring opinion of Kaufman, J.).
. The Piper family January letters and press release regarding the Grumman transaction did not cause an increase in the market price of Piper shares. On the contrary the price declined from 64¼ per share on January 28 to 59⅝ on February 3.
. “The Court has found that as of these dates Bangor Punta had not reached a decision to sell. The Commission’s charge that the sale was a reasonable probability is made from the vantage point of hindsight. In the total perspective of events preceding the sale— including the last-minute attempts to convert it into a sale of assets — the Court cannot find that the sale was a reasonable probability at the time and to the people involved.” (331 F.Supp. at 1160-1161).
. “The essential question is whether, despite the non-existence of intent or of reasonable probability, the circumstances surrounding the sale were such as to indicate that the $18.4 million carrying figure of the BAR holding was obsolete to the point of being misleading. The Court finds that it was— absent full disclosure of the factors affecting the ultimate decision to sell the BAR interest at a figure of $5 million — or even $7 million — and regardless of whether the sale was to be of stock or of assets.
!jt * * 5}! %
“I find that Bangor Punta did not intentionally or purposefully mislead Piper Aircraft stockholders or the investing public by the omission to make disclosure of the sale under consideration nor did Bangor Punta or its directors intend to gain an advantage over Chris-Craft by the nondisclosure in the contest being waged for control of Piper. There was no purposeful connection between the nondisclosure and the contest for control. In other words, the nondisclosure was not prompted by an improper purpose. However, absence of bad faith does not excuse the failure to include facts necessary to render the statements in the registration statement and prospectus not misleading.” SEC v. Bangor Punta Corp., 331 E.Supp. 1154, 1161 (S.D.N.Y.1971).
. It appears to have been the SEC in its brief that first used the phrase adopted by Judge Pollack, “Because of this demonstrated propensity for violating the securities laws, the scope of the injunction against Bangor Punta should be broad,” etc. Brief, p. 16, citing SEC v. Raffer, 1969-1970 CCH Fed.Sec.L.Rep. ¶ 92,632 (S.D.N.Y.1970). It was this standard put forward by the Commission to which Judge Pollack was evidently responding below. 331 F.Supp. at 1162-1163.