Realist, Inc. (Realist), was a Delaware corporation with its principal place of business in Wisconsin. In March 1988, Royal Business Group, Inc. (Royal), a New Hampshire corporation, acquired 8 percent of the outstanding voting stock of Realist. Royal sent a series of letters to Realist, declaring its intention to acquire all of Realist’s outstanding shares at an above-market premium. Realist repulsed Royal’s overtures. Unbeknownst to Royal, Realist began negotiations to acquire Ammann Laser Technik AG (Ammann), a company based in Switzerland. Royal instituted a proxy contest and nominated two candidates for the two Realist directorships to be filed at the annual shareholders’ meeting. Realist and Royal both submitted proxy statements to Realist’s shareholders. The insurgent Royal nominees prevailed. Realist announced that it had acquired Ammann. This acquisition made Realist much less attractive as a takeover target. Royal immediately withdrew its offer to acquire Realist and sued Realist to recover the $350,000 it had spent in connection with the proxy contest. Royal alleged that Realist had engaged in fraud in violation of Section 14(a) of the Securities Exchange Act of 1934 by failing to disclose its secret negotiations with Ammann in its proxy materials. The basis of Royal’s complaint was that if Realist had disclosed that it intended to acquire Ammann, Royal would not have engaged in the costly proxy contest. Is Realist liable to Royal? Did Realist act unethically in seeking to acquire Ammann to thwart Royal’s takeover attempt? Royal Business Group, Inc. v. Realist, Inc., 933 F.2d 1056, Web 1991 U.S. ApLexis 10389 (United States Court of Appeals for the First Circuit)