This section contains the nature of the case and procedural background.

The Flour Corporation (D) signed a major contract on February 28, 1975. There was a provision in that contract that it could not be disclosed to the public until March 10, 1975. During the week of March 3, rumors began to circulate about the existence of the contract, and the price of D's stock went up. D abided by its contract and said nothing publicly until March 10, 1975. The State Teachers Retirement Board (P) sold during the intermediary period between February 28, 1975, and March 10, 1975. After the contract was made public, the stock of the Flour Corporation shot upwards. P sues on a 10b theory and claims that the D had an obligation to disclose information about the contract in the intermediary period. P claims that D's failure to disclose the information during this period amounted to a false and misleading statement by D in violation of Rule 10b.

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