Justice Sonia Sotomayor

On April 12, 2023, in a short, unanimous opinion written by Justice Sonja Sotomayor, the U.S. Supreme Court held that a failure to disclose information required under Item 303 of Regulation S-K is, standing alone, not an actionable omission under Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Supreme Court said that in the absence of affirmative statement that is rendered misleading by the omission, an Item 303 violation alone is not sufficient to state a claim under Rule 10b-5. As the Supreme Court opinion put it in summarizing its decision, “pure omissions are not actionable under Rule 10b–5.” The Court’s opinion in Macquarie Infrastructure Corp. v. Moab Partners L.P. can be found here.Continue Reading U.S. Supreme Court: Item 303 Omissions Alone Not Actionable

In a post earlier this month, I summarized the three securities law cases that the U.S. Supreme Court will hear its current term. Among the three cases on the Court’s docket is Leidos, Inc. v. Indiana Public Retirement System. As discussed in greater detail here, in Leidos, the Court will address the question whether or not the alleged failure to make a disclosure required by Item 303 of Reg. S-K is an actionable omission under Section 10(b) and Rule 10b-5. In an interesting September 26, 2017 article entitled “Ask Me No Questions and I Will Tell You No Lies: The Insignificance of Leidos Before the United States Supreme Court” (here), Stanford Law Professor Joseph Grundfest argues that the Leidos case is “not a big deal” and is a “nothing-burger,” because, he contends, regardless of which way the Court comes out in the case, the outcome will make little practical difference.
Continue Reading Supreme Court Docket: Is the Leidos Case a “Nothing Burger”?