Second Circuit Provides Guidance on Section 13(d) "Group" Issues but Declines to Address Beneficial Ownership Issues in the Swap Context

On July 18, 2011, almost three years after the appeal was argued, the Second Circuit rendered its decision in CSX Corporation v. The Children’s Investment Fund Management (UK) LLP, a case raising significant issues under Section 13(d) of the Securities Exchange Act of 1934. Although it provided some guidance regarding the definition of a “group” for purposes of Section 13(d), the opinion for the court did not reach a central issue raised by the appeal – whether a long party to a cash-settled total-return equity swap agreement will be deemed to beneficially own shares purchased by the short party as a hedge.