MURNAGHAN, Circuit Judge:

On November 12, 1982, the district court granted a preliminary injunction which prohibited the appellants, Carl C. Icahn and several companies under his control, from exercising the voting rights appurtenant to any shares owned or acquired in Dan River, Inc., the appellee here. The temporary injunction was to endure until a full scale trial on the merits, scheduled for February 1983, could take place. Because the parties were in the midst of a heated battle for corporate control, we agreed to hear Icahn's appeal on an expedited basis. Our order reversing the district court's injunction was issued on November 19, 1982, with the assurance that written opinions would follow in due course.

I.

Dan River, Inc. is a major textile manufacturer whose stock is publicly traded on the New York Stock Exchange. During the spring and summer months of 1982, Icahn began to purchase shares of Dan River's common stock on the open market. Once Icahn amassed more than five percent of Dan River's outstanding stock — that occurred on September 13, 1982 — the group became subject to the disclosure requirements of section 13(d) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(d)(1).

As required by the 1934 Act, Icahn promptly filed a schedule 13D disclosure statement which, among other things, set forth the group's intentions with regard to Dan River. Icahn, to say the least, is no passive investor. As the 13D statement indicated, Icahn intended to obtain control of Dan River and commit the company to an active course of transactions potentially including a merger with one of the corporations controlled by Icahn or a sale of Dan River's assets so as to generate cash for additional business combinations. The Icahn group was not single-minded, though. The group conceded in the 13D statement that, given an acceptable offer, it would be willing to abandon the takeover plans and sell its Dan River shares.

Dan River has emphasized that Icahn has taken such a position in other companies before. According to management, Icahn's position is nothing short of an extortionate scheme: Icahn purchases a significant interest in a company and then, by threatening a battle for control, puts pressure on management to either buy out its interest or to find a third party, the so-called "white knight," to do so — all at a considerable profit to Icahn. It appears that Icahn rarely needs actually to engage in a battle for corporate control by way of a tender offer; its mere presence and its ability to engage in a control struggle, according to Dan River, have convinced the management of other companies to rid themselves of Icahn through a buy-out at inflated prices.

Not so here, however. Dan River management met with Icahn, rejected its overtures, and took two immediate steps to fend off the Icahn group. On October 4, 1982, Dan River issued 1.7 million shares of preferred stock to a newly created employee stock bonus plan. The shares enjoy voting rights and, as is customary for issues of preferred stock, stand ahead of the common shares with regard to dividend payments and distribution rights in the event of dissolution. The bonus plan awards the preferred stock on the basis of an employee's salary, and therefore may be expected to help management — the highest paid employees — consolidate control of the company while diluting Icahn's position in Dan River.

On the following day, Dan River management brought suit in the United States District Court for the Western District of Virginia. Dan River raised five arguments in the complaint, and sought equitable relief in the nature of an injunction prohibiting Icahn from dealing with Dan River in any way. The first ground alleges that Icahn's "buy-me-out-or-face-a-takeover" ultimatum is a manipulative and deceptive scheme in violation of section 10(b) of the 1934 Act, 15 U.S.C. § 78j, and its Rule 10b-5, 17 CFR § 240.10b-5 (1982). The second ground alleges that Icahn's disclosures in the Schedule 13D were deficient. The third ground maintains that Icahn's interests in Dan River are being financed with money derived from a pattern of racketeering activity in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-68. The fourth claim is that Icahn's disclosures are insufficient under the Virginia Take-Over Bid Disclosure Act, Va. Code §§ 13.1-528 through 13.1-541. The fifth ground asserted is that Icahn intends to "loot" Dan River in violation of the corporation law of the Commonwealth of Virginia.

Having failed to receive an acceptable offer from management for its shares, Icahn responded to Dan River's unreceptive stance with a tender offer. On October 25, 1982, Icahn proposed to buy 3.1 million shares of common stock at a price of $18 per share subject to a key condition — that Dan River management not oppose the offer. In the event management should resist the offer, Icahn would only purchase 700,000 shares at the lower price of $15 per share. Icahn made the appropriate filings under section 14(d) of the 1934 Act, 15 U.S.C. § 78n(d).

Management was undeterred in its opposition by the offer. It actively sought to frustrate the success of Icahn's bid and, moreover, amended its complaint filed in the United States District Court for the Western District of Virginia to add a two-fold challenge to the legality of the offer. Dan River claims the offer is an illegal "bait-and-switch" offer proscribed by section 14(e) of the 1934 Act, 15 U.S.C. § 78n(e), and that the disclosures made by Icahn pursuant to section 14(d) of the Act, 15 U.S.C. § 78n(d), were misleading in their representations and in their omissions.

The $18 conditional offer on November 9, 1982 lapsed by its own terms. Icahn then revised its tender offer. Under that latest proposal, Icahn offers to buy 2 million shares at $16.50 per share. Under the terms of the offer, Icahn reserves the right to purchase more than 2 million shares if they are tendered.

Management was not without a counter. With the tender offer under way and nearing its completion, Dan River moved for a preliminary injunction to block Icahn's purchase of stock under the bid.

The district court, sensing that both parties had a great deal at stake, fashioned what it deemed to be a fair compromise. It permitted the tender offer to go forward, subject to an extension of the withdrawal date by one week and a requirement that certain inconsistencies in Icahn's disclosure statements be corrected. Neither party appeals that portion of the injunction. At issue are the provisions of the district court's order which prevent Icahn from exercising any of the rights which inhere in the shares already bought and the shares to be acquired in the tender offer. Icahn is enjoined from voting, from calling shareholder meetings, from seeking proxies and from attempting in any way to change the management or board of directors of Dan River until the merits of the action are resolved sometime in or after February of 1983. The district court also endeavored to minimize any harm which Icahn might suffer from the "sterilization" of its shares, wisely enjoining management from taking any actions outside the ordinary course of business in the interim.

Icahn appeals the "sterilization" of its shares.

II.

Our jurisdiction is predicated upon 28 U.S.C. § 1292(a) and we accordingly limit our review to the propriety of the preliminary injunction issued by the district court.

The trial court standard for a preliminary injunction is the balance-of-hardship test. As succinctly stated in North Carolina State Ports v. Dart Containerline Co., 592 F.2d 749 (4th Cir. 1979):

Four factors enter into the determination of whether to grant or to withhold interim injunctive relief: (a) plaintiff's likelihood of success in the underlying dispute between the parties; (b) whether plaintiff will suffer irreparable injury if interim relief is denied; (c) the injury to defendant if an injunction is issued; and (d) the public interest.

Id. at 750. We there provided further guidelines regarding the weight to be assigned each factor:

There is a correlation between the likelihood of plaintiff's success and the probability of injury to him. If the likelihood of success is great, the need for showing the probability of irreparable harm is less. Conversely, if the likelihood of success is remote, there must be a strong showing of the probability of irreparable injury to justify issuance of the injunction.

Id. See also Fort Sumter Tours, Inc. v. Andrus, 564 F.2d 1119 (4th Cir. 1977); Blackwelder Furniture Co. v. Seilig Manufacturing Co., 550 F.2d 189 (4th Cir. 1977). The standards are fully applicable in cases involving tender offers and the strictures of the Williams Act. See Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 95 S.Ct. 2069, 45 L.Ed.2d 12 (1975).

With these considerations in mind, we proceed to a determination of how the balance-of-hardship tips.

III.

The balance-of-hardship leads us to conclude that the primary critical factor for purposes of determining the propriety of injunctive relief here is the likelihood that Dan River will prevail on the merits of its complaint. That factor — the likelihood of success on the merits — is examined in depth in Part IV of our opinion. But first, it is necessary to review the hardships facing both parties which indicate that the balance does not tilt in Dan River's favor and that, accordingly, a strong likelihood of success on the merits is necessary to justify the granting of the preliminary injunction.

We begin with the prospects for Dan River and, for purposes of analysis, assume the company's allegations are true. The company fears that Icahn will, upon obtaining control of Dan River, embark upon a course of extraordinary transactions which will dismantle the company as it now exists. Those transactions, management argues, simply cannot be undone. What is more, management fears that Icahn will "loot" Dan River in the process, diverting its assets to its own use.

Management's fears, if substantiated, would be weighty. But they must be discounted for at least two reasons. First, the harms it fears are distant. As Icahn notes, Virginia corporation law, along with federal laws pertaining to proxies, makes it a virtual certainty that, however successful Icahn's tender offer may turn out to be, any major changes in Dan River will take time. Management will have more than adequate opportunity to petition a court for injunctive relief when and if the fears mature into imminent danger. And if, perchance, Icahn makes good on its stated intention to dismiss the case at hand upon seizing control of the company, a timely suit seeking interim relief still might be brought by a shareholder. Second, as to Dan River's allegation that Icahn will breach fiduciary duties and "loot" the company, we note that adequate remedies at law exist to compel a corporate looter to disgorge misappropriated funds. See, e.g., Crump v. Bronson, 168 Va. 527, 191 S.E. 663 (1937). The availability of those remedies operates as a restraint sufficient to permit discount of suspicions unsupported as yet by any hard evidence.

While Dan River's fears are, therefore, premature, the costs to Icahn on the other hand will come due very soon. As we perceive the situation, the "sterilization" of Icahn's shares inevitably works a serious harm. Assuming that Icahn will prevail at trial, the harm to Icahn is a considerable roadblock in its quest for control of Dan River. Icahn loses valuable time. The mere existence of the temporary injunction can be expected to deter some shareholders from tendering. If the tender offer leaves Icahn short of a numerical majority but with enough shares to constitute an imposing presence, further steps — especially, a proxy battle — would be in the offing. The order prohibits Icahn from soliciting proxies. In the months to come before Icahn's shares are freed from the restrictions of the order, management can be expected to court the remaining shareholders as it gears for the final contest for control. Riding the crest of its tender offer, Icahn's chance of winning would appear strong. With time to regroup and consolidate, management's chances are enhanced. The potential harm to Icahn, then, is loss of its best opportunity to seize control of a major corporation. The delay to Icahn could be crucial. See Edgar v. MITE Corp., ___ U.S. ___, ___, 102 S.Ct. 2629, 2638, 73 L.Ed.2d 269 (1982) (delay can seriously impede a tender offer).

Weighing harms is no simple task. Critical to the weighing process here, though, is the simple fact that Dan River faces no immediate threat of irreparable harm. Under the circumstances, we cannot conclude that the balance-of-hardship favors management.

IV.

Furthermore, we do not believe that Dan River has shown a strong likelihood of success on any of its legal claims. While we of course do not, on a partial record in an expedited appeal, purport to provide definitive rulings on the many legal questions raised, we find that Dan River faces innumerable hurdles which make the likelihood of its success at trial small.

A

The first claim we address is Dan River's contention that Icahn's "buy-me-out-or-face-a-takeover" ultimatum is a manipulative and deceptive scheme prohibited by section 10(b) of the 1934 Act, 15 U.S.C. § 78j, and Rule 10b-5, 17 CFR § 240.10b-5 (1982), promulgated thereunder.

We note at the outset that the district court did not purport to base its order on any perceived questions under Rule 10b-5. Nevertheless, the issue is before us as a possible ground upon which the injunction may rest. Our analysis of Dan River's claim under Rule 10b-5 reveals that there are problems inherent in Dan River's position which suggest that the claim will not prevail.

One serious problem is the matter of standing. It is not at all clear to us that Dan River has even stated a claim under Rule 10b-5. In Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975), the Supreme Court held that only buyers and sellers of securities within the relevant time period of the allegedly manipulative acts may sue under section 10(b) and Rule 10b-5. A hot dispute between Dan River and Icahn exists over whether the company was a purchaser or seller of its shares during the period in question. Dan River argues that the alleged fraud began the moment Icahn began purchasing Dan River stock in the spring of 1982, and that the company sold some of its common stock in June or July of 1982, thus giving Dan River standing to sue. Icahn denies that Dan River made any such sales.

Moreover, we observe that, prior to September of 1982 and Icahn's filing of a Schedule 13D statement with its allegedly coercive ultimatum to management, Icahn merely purchased on the open market, without representations of any kind. Thus, even if Dan River did sell its stock in the summer months, there is a serious question whether the sale occurred during the period when Icahn was supposed to be manipulating the market.

Dan River might argue, but has not argued thus far, that its issuance of preferred stock on October 4, 1982 gives it standing under section 10(b). The argument suffers from at least one serious flaw — that issuance of stock might well be set aside as unlawful. Icahn has filed a counterclaim to set aside the issuance as devoid of a bona fide business purpose and merely a scheme to dilute Icahn's position in Dan River and to make the proposed takeover more difficult to accomplish.

Apart from standing, there is the difficult matter of proof. Dan River must prove that Icahn's ultimatum amounts to "intentional or willful conduct designed to deceive or defraud investors by artificially affecting the price of securities." Ernst Ernst v. Hochfelder, 425 U.S. 185, 199, 96 S.Ct. 1375, 1384, 47 L.Ed.2d 668 (1976). The company likens Icahn's ultimatum to an extortionate threat, but we fail to appreciate the supposed similarity. Icahn does put Dan River's management to a difficult choice — accede to a takeover or employ defensive moves — but so does any party who, altogether lawfully, contemplates a takeover attempt. On the record as it now stands, we can conclude only that Icahn is extraordinarily frank and reminds management of its defensive options by indicating that, if the price is right, the takeover might be aborted. We doubt that such frankness will be found to violate section 10(b) and Rule 10b-5 and pause only to highlight a potential irony. Were Icahn's conduct to be held unlawful, we would be left with the peculiar result that the tender offeror who openly informs the investment community that a buy-out is a distinct possibility is damned while the tender offeror who conceals the same information proceeds unimpugned.

B

The second management claim to consider is the allegation that Icahn's collective filings are inadequate. The claim spans three statutory provisions — sections 13 and 14 of the 1934 Act, added by the Williams Act of 1968, Pub.L. No. 90-439, 82 Stat. 454 (codified as amended at 15 U.S.C. §§ 78m, 78n), and the Virginia Take-Over Bid Disclosure Act. For our purposes, it is sufficient to treat the various provisions as one.

Dan River alleged a welter of supposed disclosure inadequacies but, upon review, it is apparent that the case boils down to the omission of one identifiable and allegedly material fact. With the possible exception of that omission — which will be discussed in more detail momentarily — Icahn's filings appear exceptionally thorough. Icahn clearly and forthrightly set forth its intent to consider extraordinary corporate transactions such as a merger or a sale of substantially all of the corporate assets. See n. 2, supra. The disclosures here give full warning that sweeping changes might take place if Icahn should obtain control. Further, the materials clearly state that the proceeds of any sales of assets would, prior to any distribution to shareholders, likely be devoted to efforts to acquire other companies and securities.

The omission so heavily stressed by Dan River is Icahn's failure to reveal that Icahn Capital, one of Icahn's controlled companies, faces a contingent obligation of $5,000,000. The obligation represents a guarantee of a bank loan to a company not involved in the present transaction. When pressed at oral argument, counsel for Dan River agreed that the liability is probably immaterial for purposes of Icahn's ability to meet the terms of its tender offer, but remained resolute in the belief that the liability is material to those shareholders who might prefer to spurn the tender offer and reap the expected benefits of future transactions involving both Dan River and the Icahn group.

While the issue is not free from doubt, we have concluded that it is far from clear that the omission will be adjudicated in a full scale trial on the merits to have been material — that is, that the fact would assume "actual significance in the deliberations of the reasonable shareholder." TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S.Ct. 2126, 2132, 48 L.Ed.2d 757 (1976). A liability of $5,000,000, discounted to some extent because it is contingent, of one of the concerns comprising the Icahn group, does not appear to alter the composite picture of the financial ability of the Icahn group to carry out the aggressive plans it proposes. A perusal of the financial statements reveals that the group boasts approximately $28 million in shareholder or partner equity (assets less liabilities) — a sizeable sum, indeed, to pursue its plans.

More significantly, however, the recognition that the case involves, in the end, the omission of one identifiable and allegedly material fact raises the question whether the "sterilization" order which we review here is an appropriate remedy for the supposed wrong. On the facts of the particular case before us, we are constrained to hold that the order "sterilizing" Icahn's stock cannot be justified on the basis of the insufficient disclosure alleged.

A conclusion that an offeror has failed to make full disclosure must, at bottom, rest upon a finding that the shareholders are being deprived of information necessary to evaluate and act upon the offer. The best remedy for such a problem is to get more information to the shareholders before they have to decide whether or not to tender their shares. Had management been serious in its desire to get all relevant information to its shareholders, it easily could have directed the district court's attention to the omitted contingent liability and sought an order holding up the tender offer unless and until Icahn amended its 14D statements, and appealed the refusal of the district court to do so.

Management has not followed such a course, however. Dan River has not appealed the district court's refusal to enjoin the tender offer. Rather, it merely argues on appeal that the more limited "sterilization" order is nevertheless an appropriate remedy for perceived disclosure violations. Reference is made to other cases which have employed the remedy without detailed analysis, and a theory in support of the position is proffered — that where the greater is permissible, the lesser is a fortiori acceptable. To the extent such an approach has merit, it applies only to situations where the greater and the lesser are like in kind.

The so-called lesser remedy of "sterilization" is most certainly acceptable to management, for management is the chief beneficiary of the order. "Sterilization" of Icahn's shares immunizes management from any challenges to its control of the company. Yet the thrust of disclosure laws is to protect shareholders, not management. Management's right of action under the Williams Act is primarily in the interest of the Dan River stockholders to ensure "truthful and complete" information. Dan River, Inc. v. Unitex Ltd., 624 F.2d 1216, 1224 (4th Cir. 1980), cert. denied, 449 U.S. 1101, 101 S.Ct. 896, 66 L.Ed.2d 827 (1981). Manifestly, the "sterilization" order affords shareholders no more "truthful and complete" information than that already provided by Icahn in its filings.

Dan River has, on appeal, demanded no relief in the nature of greater disclosure. The district judge manifestly perceived no inadequacy in Icahn's representations sufficient to require the enjoining of the tender offer.

At most, the "sterilization" order is an attempt to foreclose any harm that shareholders might suffer as a consequence of Icahn's purchase of shares under the tender offer. In that regard, "sterilization" of Icahn's shares exacts a heavy toll from Icahn while, at best, yielding stockholders a small measure of premature relief. Icahn is enjoined from actions which can hardly be said to pose harm to shareholders. There is little to be feared, for instance, in permitting Icahn to solicit proxies. Nor does there appear to be much cognizable harm in allowing Icahn to press a vote for new management — a vote the result of which could, if the need arises, be voided or enjoined from taking effect upon the motion of the current management or upon the filing of a suit by interested shareholders.

We have no occasion to assess the appropriateness of a "sterilization" order in all the circumstances of faulty disclosure which might be envisioned. The "sterilization" order before us here, however, is an over-broad and inequitable interim remedy for the alleged disclosure violation.

C

Dan River's third argument is that the tender offer itself violates the Williams Act. The claim is that the two-price offer — $18 per share for 3.1 million shares if management capitulates, $15 per share for 700,000 shares if management fights on — is tantamount to a "bait-and-switch" operation. According to Dan River, Icahn never believed that management would accede to the tender offer and, in reality, the higher offer for more shares was an illusory piece of bait which induced shareholders to tender.

The hurdles facing Dan River are nearly insuperable by our calculation. First and foremost, it is doubtful that Dan River's challenge to the substance of the offer even states a claim for relief under section 14(e) of the 1934 Act, 15 U.S.C. § 78n(e). The legislative history of the Williams Act makes clear that the sole purpose of section 14(e) is to ensure adequate disclosure to shareholders so that they may make informed decisions whether or not to tender their shares. See Piper v. Chris-Craft Industries, Inc., 430 U.S. 1, 26-37, 97 S.Ct. 926, 941-47, 51 L.Ed.2d 124 (1977); Martin Marietta Corp. v. Bendix Corp., 549 F. Supp. 623 (D.Md. 1982) ( Marietta II). After a careful study of the authorities, the Marietta II court concluded that section 14(e) could not be employed solely to challenge the substantive goodness of a tender offer or its effects on the forces of supply and demand in the market place. Rather, some material nondisclosure must be proved in order to sustain the claim. Id. at 627-33.

We need not resolve the issue. It is sufficient merely to raise the question for its viability poses a considerable problem which Dan River will have to solve at trial if it is to prevail.

Assuming section 14(e) does recognize claims against the substance of a tender offer, it is still far from clear that Dan River has a serious chance of prevailing. The mere fact that a tender offer affects the market price of a stock cannot mean that the tender offer is an unlawful scheme to manipulate. Were that so, all tender offers would be forbidden. The fact that Icahn's two-level offer injects an element of uncertainty into the offer does not, in and of itself, make the offer a manipulative device. Most tender offers include conditions which make acceptance of the tender uncertain. See 1 M. Lipton E. Steinberger, Takeovers Freezeouts § 1.7.11 (1978) (clauses permitting revocation of offer in event of litigation).

The closest analogy presented to us is found in Cities Service Co. v. Mesa Petroleum Co., 541 F. Supp. 1220 (D.Del. 1982), and it casts further doubt on Dan River's claim. The acquirer made a "friendly" tender offer for 46 percent of the target's shares at $50 per share. Target management rejected the "friendly" offer, and the acquirer followed with a second "hostile" offer for 15 percent of the target at the lower price of $45 per share, with the right to buy more than 15 percent if financing could be arranged. The target moved for a preliminary injunction, alleging that the first "friendly" offer was designed to induce shareholders into believing that the acquirer could well afford to purchase at least 46 percent at $50 per share and that, consequently, shareholders would embrace the second, lower offer in the hopes that more than the stated 15 percent would be purchased. The district court denied the motion, pointing out that full disclosure apparently was made and that the claim therefore was unlikely to prevail.

We cannot overlook the fact, as well, that the initial two-level offer has lapsed. The shareholders who tendered their shares under the original offer denominated "bait-and-switch" by management have been granted, under a portion of the district court's order from which no appeal has been taken, and with which Icahn has signified its readiness to comply, additional time to reconsider their decisions — more time, even, than Icahn's proposal of the second offer gave them. In the typical true "bait-and-switch" operation, the consumer, in contrast to Dan River shareholders here, is rarely given time to deliberate in a leisurely manner.

As to alleged disclosure problems with respect to the two-level offer, it would appear that Dan River has little chance of prevailing. Icahn stated the terms of the offer, the conditions necessary for the $18 offer to be effective, and the effects of over- and under-subscription to the offer. Moreover, the Schedule 14D filings by Icahn made clear that management was resistive to the offer and, therefore, could be expected to refuse to accede to the tender offer, rendering the $18 offer evidently nugatory.

D

Dan River's fourth claim invokes the Racketeering Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-68, and its provision making unlawful the acquisition of an interest in a business through funds derived from a "pattern of racketeering activity." § 1962(a). A pattern of racketeering activity is defined as the commission of at least two predicate offenses within a ten year period. § 1961(5). The predicate offenses include extortion which qualifies as a felony under state law, federal mail fraud, and federal securities fraud. § 1961(1).

To understand Dan River's RICO claim, it is necessary to become acquainted with Bayswater Realty Capital Corporation ("Bayswater"). In a previous incarnation, Bayswater was a company whose assets consisted primarily of real estate holdings. Icahn obtained control of Bayswater and, accepting Dan River's version of things, began selling off Bayswater's real estate properties, thus converting them into securities and other liquid instruments.

Dan River argues that Icahn's transformation of Bayswater constitutes the centerpiece of its RICO claim. The argument is that Bayswater has become an investment company under Icahn's stewardship, that the Investment Company Act of 1940, 15 U.S.C. § 80a-1, et seq., requires all investment companies to register with the SEC, and that Icahn willfully and deliberately failed to register Bayswater.

The predicate offenses alleged by Dan River involve Icahn's employment of Bayswater in three earlier takeover attempts. In two of the three cases, Icahn used funds from Bayswater as part of the pool of money to buy shares of the targets. In those cases, management of each targeted company eventually repurchased the shares. In the third case, Icahn merely listed Bayswater as among the money sources available in a possible takeover.

According to Dan River, Icahn's uses of Bayswater amount to securities fraud. The theory is that Icahn represented that it had authority to use Bayswater's funds, whereas an unregistered investment company could not vest Icahn with such authority. Dan River also asserts that Icahn's uses of Bayswater constitute mail fraud. In each instance, Carl C. Icahn, as an officer of Bayswater, allegedly violated his fiduciary duty to shareholders and concealed material information in the process, thus violating the mail fraud statute, 18 U.S.C. § 1341.

Finally, Dan River asserts that predicate offenses may also be found in Icahn's use of the "buy-me-out-or-face-a-takeover" ultimatum on earlier occasions. As already observed, Dan River considers Icahn's strategy a violation of section 10(b) and Rule 10b-5, and has not hesitated to characterize it as "extortionate."

Our review of the RICO claim persuades us that there are just too many flaws and too much speculation to conclude that Dan River is likely to succeed at trial. Even before examining the question of whether Dan River has a substantial likelihood of proving what must be a difficult case at best, we must address an important preliminary issue. Dan River's complaint seeks solely equitable relief. There is substantial doubt whether RICO grants private parties such as Dan River a cause of action for equitable relief. Section 1964(c) grants private parties a right of action for treble damages against the RICO offender, but the section has nothing to say about injunctive relief. Subsection (b) of section 1964 permits the attorney general to bring proceedings under the Act, and that provision — in sharp contradistinction to § 1964(c) — allows for equitable relief.

To sustain the district court's order on RICO grounds, then, Dan River must establish that actions for equitable relief are implied in the statute. While we do not undertake to resolve the question, nevertheless, the probability of success is affected adversely by the very existence of the uncertainty. In light of the most recent indications from the Supreme Court, Dan River's action for equitable relief under RICO might well fail to state a claim. See, e.g., Middlesex County Sewerage Authority v. National Sea Clammers Association, 453 U.S. 1, 101 S.Ct. 2615, 69 L.Ed.2d 435 (1981); Touche Ross Co. v. Redington, 442 U.S. 560, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979).

We next proceed on the assumption that the RICO statute does afford a remedy of equitable relief to private parties. Doing so, we begin with the linchpin of Dan River's theory — the claim that Bayswater is an unregistered, and hence unlawful, investment company. As Dan River freely acknowledges, it is that claim which sets its RICO argument apart from a similar, albeit unsuccessful, one levied against Icahn in an earlier takeover struggle. Marshall Field Co. v. Icahn, 537 F. Supp. 413 (S.D.N.Y. 1982). The Marshall Field court regarded as altogether dubious the RICO charges against Icahn. Dan River maintains, however, that, by adding Bayswater to the picture, different conclusions must follow.

We see a difference, but not a difference which suggests that Dan River's claim is likely to prevail. First, it is far from clear that Bayswater is in fact an unlawfully unregistered investment company. Both parties have filed lengthy analyses, and Bayswater's status under the Investment Company Act may well turn, in the end, on difficult and complicated real estate valuations. At such an early stage, we are unprepared to say Dan River has stated a compelling case against Bayswater.

There are many more bridges under which Dan River must flow to make its case. It will be difficult to prove criminal intent with regard to Bayswater's failure to register with the SEC. Criminal intent, is, of course, necessary to either mail fraud or securities fraud. See United States v. Mandel, 591 F.2d 1347, 1363 n. 11 (4th Cir. 1979), cert. denied, 445 U.S. 961, 100 S.Ct. 1647, 64 L.Ed.2d 236 (1980) (mail fraud); United States v. Vandersee, 279 F.2d 176, 179 (3d Cir. 1960), cert. denied, 364 U.S. 943, 81 S.Ct. 385, 5 L.Ed.2d 374 (1961) (securities fraud). The evidence indicates that Carl C. Icahn and his attorneys constantly monitored the holdings of Bayswater in a serious attempt to prevent Bayswater from becoming an investment company. Too, it appears that Carl C. Icahn acted pursuant to bona fide legal opinions that Bayswater was not an investment company when he enlisted the company in his earlier takeover ventures. In the face of such evidence, it would seem extremely unlikely that Dan River will be able to prove the predicate acts of mail or securities fraud. See, e.g., Bisno v. United States, 299 F.2d 711, 719-20 (9th Cir. 1961), cert. denied, 370 U.S. 952, 82 S.Ct. 1602, 8 L.Ed.2d 818 (1962) (while not an absolute defense, reliance upon legal counsel is evidence of good faith which rebuts inferences of criminal intent; the defendant is entitled to such a jury instruction).

As our discussion of Dan River's Rule 10b-5 claim indicated, it will not be easy to find predicate offenses in Icahn's prior use of the ultimatum strategy — whether the theory be one of securities fraud or extortion. We do not accept that Icahn's candid recognition and expression of the facts of life in corporate capitalism — namely, that management, in its own interests or in the interests of its shareholders, might be tempted to prevent a takeover by either buying out the bidder or securing a "white knight" to do so — is illegal.

Finally, we note the mounting controversy in the federal courts over the proper limits, if any, upon the use of RICO in cases far removed from the context which Congress had in mind when it enacted the statute. Congress was out to attack the problem of organized crime, not the problems of corporate control and risk arbitrage. We of course make no attempt to resolve the dispute here and now. We do not propose to enter the fray. We only note that the reach of RICO is itself a troubling issue which adds to the problems Dan River will face at trial. See generally Note, Civil RICO: The Temptation and Impropriety of Judicial Restriction, 95 Harv.L.Rev. 1101 (1982).

E

The fifth and final claim we must assess is Dan River's allegation that Icahn intends to "loot" the company in violation of Virginia corporation law. The gravamen of the complaint is that Icahn will, upon obtaining control of the company, convert Dan River's assets into cash and then divert that cash to its own use. It is apparent that the district court's "sterilization" order was designed primarily to prevent just that from happening.

To find a violation under state corporation or fiduciary duty laws, we would have to be presented with evidence that Icahn intends to "self-deal" with Dan River's assets. It is not enough to allege that, upon seizing control of the company, Icahn might engage in extraordinary transactions to make Dan River more "liquid." After all, Virginia law indubitably permits those in control of a corporation to sell all or substantially all of the corporate assets, Va. Code § 13.1-77, to merge the corporation with another, Va. Code § 13.1-71, or even to dissolve the company, Va. Code § 13.1-81. Of course, Virginia imposes procedural requirements which must be followed and gives minority shareholders measures of protection. Icahn has from the very outset asserted that such laws will be obeyed.

The speculative allegation that Icahn will go further and actually divert corporate assets to personal use is a serious claim which requires serious proof. The proof before us now, however, is virtually non-existent. The thrust of Dan River's evidence is that Icahn's enlistment of Bayswater in its own takeover ventures smacks of self-dealing, and that it is right to assume that Icahn will do the same with Dan River.

A few observations will suffice to show the inherent weakness of Dan River's position. First, the fact that a party has done wrong before is generally an unapproved way of proving that the party will commit another wrong in the future. See, e.g., United States v. O'Connor, 580 F.2d 38 (2d Cir. 1978) (reversing conviction obtained through use of evidence of prior crimes). Second, it is far from clear that what Icahn did in the past was unlawful. We are presented with no prior adjudications of either criminal or civil liability with regard to Icahn's dealing with Bayswater. And, assessing the facts at face value, it would appear that Icahn only did with Bayswater what any party in control of a corporation is entitled to do — that is, direct the company into more aggressive, takeover-minded transactions.

On the slim record before us, we are exceedingly reluctant to permit allegations of intended future wrongdoing — allegations easily made under the absolute privilege enjoyed by a litigant before the courts — to come in the way of Icahn's presumptively legitimate attempts to obtain control of a company in which it owns shares. Those allegations are short on supporting evidence. If and when the fear of wrongdoing should ripen to imminence, Dan River shareholders will have ample time and opportunity to seek relief from the courts.

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(b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,

in connection with the purchase or sale of any security.