Federal Courts Address the Materiality Standard – Now What?

more+
less-

Since the beginning of 2011, the Federal courts have decided two cases that, together with a decision from 2010, change the playing field for disclosure standards in periodic reports and registration statements by public companies. The 2011 cases deal with materiality judgments while the 2010 decision reminds issuers of the rules of the road for making forward-looking statements.

In March 2011, the Supreme Court decided Matrixx Initiatives, Inc. v. Siracusano, holding that securities class-action plaintiffs had adequately pleaded materiality regarding nondisclosure of adverse events even though the events were statistically insignificant. The Court affirmed the materiality standard stated in Basic v. Levinson – whether a reasonable investor would have viewed the undisclosed information as having significantly altered the total mix of information made available. The Court rejected a “bright-line” statistical significance test to determine whether certain undisclosed information – in this case, some reports showing a link between Matrixx’s Zicam remedy and loss of smell – would be material to a reasonable investor.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jackson Walker | Attorney Advertising

Written by:

more+
less-

Jackson Walker on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
×
Loading...
×
×