In Matrixx Initiatives, Inc. v. Siracusano, No. 09-1156, 2011 WL 977060 (U.S. Mar. 22, 2011), the United States Supreme Court (Sotomayor, J.) held unanimously that the materiality of an alleged false or misleading statement or omission for purposes of pleading a violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Securities & Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5, is inherently fact-specific, depending upon whether a “reasonable investor” would have viewed the relevant information “as having significantly altered the total mix of information made available.” The Supreme Court declined to apply a “bright-line rule” that only “statistically significant” information regarding the safety of drug products is sufficiently material to support a Rule 10b-5 claim against a drug manufacturer based on a failure to disclose. This decision reaffirmed prior Supreme Court precedents holding that materiality is highly fact-specific, although it also made clear that the test of whether information is material is based upon an objective standard of a “reasonable investor.” The Court left open the question of whether a statistically significant reaction by the stock market in response to a corrective disclosure is dispositive to the question of materiality.
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