Prior to the Court`s decision in TSC Industries, the Second Circuit had already explained the role of the requirement to serve Rule 10b-5 in terms of information or events or any or speculative information, in a manner independent of the other provisions of the rule. In these circumstances, „the essence depends, at some point, on a balancing act on both the alleged probability of the occurrence and the expected size of the event, taking into account the overall activity of the business.” SEC v. Texas Gulf Sulphur Co., 401 F.2d, at 849. It is interesting to note that neither the decision of the third arrondissement, which accepts the test of principle of the agreement, nor the petitioners are challenged here with this general standard. On the contrary, they suggest that there are good reasons to reach an agreement on prices and structure for preliminary merger negotiations. The District Court issued a presumption of appeal by members of the applicant class on the petitioners` public statements, which allowed the Tribunal to conclude that common questions of fact or law prevailed over certain matters relating to individual applicants. See The Fed. Rule Civ. Proc. 23 (b) (3). The district court therefore certified the class to the defendants. 5 On the merits, however, the District Court issued a summary judgment to the defendants [485 U.S.
224, 229]. It found that not all false claims are legally significant: no negotiations were under way at the time of the first declaration and, although the negotiations took place at the time of the second and third declarations, these negotiations are not „doomed with sufficient certainty to become a merger agreement in principle”. App. Pet. For Cert. 103a. The Sixth Arrondissement explicitly rejected the agreement in principle, as we do today, but adopted in its place a rule which, if taken literally, would, in our view, be equally insensitive to the distinction between the essentials and the other elements of a measure under Rule 10b-5: three justifications have been proposed to support the „Agreement in principle” test. The first comes from the fear expressed in TSC Industries that an investor is not overwhelmed by overly detailed and trivial information, and focuses on the significant risk that previous merger discussions will collapse: since these discussions are inherently timid, disclosing their existence could mislead investors and encourage erroneous optimism.