In the case of Foremost-McKesson, Inc. v. Provident Securities Co., 1975, the U.S Supreme Court was asked to determine whether a corporation could be held liable for damages under Section 10(b) of the Securities Exchange Act and Rule 10b-5 when it made false statements in connection with its own securities transactions. The court ruled that a corporation can indeed be held liable if it makes misleading or false statements about its financial condition to induce investors into purchasing or selling their shares at an unfair price. This decision established that corporations have a duty not only to refrain from making fraudulent misrepresentations but also from omitting material facts which would make other disclosed information misleading.

In the dissenting opinion for Foremost-McKesson, Inc. v. Provident Securities Co., Justice William O. Douglas argued that the majority's decision to allow a corporation to sue its shareholders was fundamentally flawed and contrary to established legal principles. He contended that this ruling would create an imbalance of power between corporations and their shareholders, with corporations having undue influence over shareholder actions due to their ability to bring lawsuits against them. Furthermore, he believed it could potentially lead to abuses by corporate management who might use such suits as a means of suppressing dissent among shareholders or avoiding accountability for mismanagement or misconduct.