Material Misstatements

News & Analysis as of

Supreme Court limits liability for statements of opinion contained in securities offerings

In a highly anticipated decision issued Tuesday, the United States Supreme Court confirmed that an issuer’s statements of honestly held opinion or belief cannot give rise to liability under section 11 of the Securities Act of...more

Second Circuit Revisits Remedies In Amara v. Cigna

The Second Circuit court of appeals held that a court can exercise its equitable powers to reform the terms of a cash balance retirement plan to provide greater benefits than stated in response to material misstatements made...more

Supreme Court Clarifies Liability Standard for Statements of Opinion in Securities Offering Registration Statements

A common question under Section 11 of the Securities Act of 1933 is whether and under what circumstances an issuer’s statement of opinion or belief may give rise to liability. The Supreme Court recently held in Omnicare, Inc....more

Supreme Court’s Omnicare Decision Follows Middle Path Advocated by Lane Powell and Washington Legal Foundation

In the March 24 opinion issued in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund (Omnicare), the Supreme Court rejected the two extremes advocated by the parties regarding how the truth or...more

U.S. Supreme Court Clarifies Standard for Challenging an Expression of Opinion in Registration Statement

On March 24, 2015, the U.S. Supreme Court limited a securities plaintiff’s ability to claim a remedy for statements of “belief” or “opinion” that turn out to be wrong. In Omnicare, Inc. v. Laborers District Council...more

George Costanza and the Supreme Court Align in Ruling This Week on Section 11 of the Securities Act of 1933

In a classic Seinfeld episode, George Costanza opined: "it's not a lie, if you believe it". In a ruling handed down on March 24th, the Supreme Court agreed with this sentiment as it concerned claims brought under Section 11...more

The Supreme Court's Omnicare Decision: Implications And Remaining Questions Regarding When Opinions Are Actionable Under The...

On March 24, 2015, the Supreme Court issued its much anticipated decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, No. 13-435, 2015 WL 1291916 (Mar. 24, 2015). With some significant...more

Supreme Court Clarifies Standard For Holding Issuers Liable Under The Securities Act Of 1933

In a highly-watched securities law decision, the United States Supreme Court yesterday ruled unanimously that opinion statements in public securities registration statements are not actionable under § 11 of the Securities...more

IMHO, Omnicare Doesn’t Materially Change Opinion Disclosure

Today, the U.S. Supreme Court issued its anticipated Omnicare decision, which addresses the standard of liability applied to expressions of opinion in a registration statement for a public offering. While there will be...more

2014 Insider Trading Annual Review

Overview of Insider Training Law - “Insider trading” is an ambiguous and overinclusive term. Trading by insiders includes both legal and illegal conduct. The legal version occurs when certain corporate insiders –...more

Of Broken Leases and ‘Broken Windows’

On Dec. 3, 2014, the Division of Enforcement of the U.S. Securities and Exchange Commission brought an enforcement action against two former top executives of Assisted Living Concepts LLC, a large provider of senior living...more

California Court Issues Mixed Ruling On Cross-Motions In Suit Seeking Policy Rescission

A California federal district court granted in part and denied in part various motions involving Star Insurance’s action seeking to rescind an insurance policy based upon certain alleged material misrepresentations concerning...more

District Court Defines Surcharge Broadly

A New York district court held that surcharge could include not only make-whole relief, but also consequential, exemplary, or punitive damages in limited circumstances where malice or fraud is involved. Plaintiff Janet...more

Southern District Dismisses Complaints Against China North Director and Consultant

On December 10, a New York district court judge dismissed a securities fraud class action brought by investors in China North East Petroleum Holdings, Ltd. against former director Robert Bruce (and others) on the ground that...more

SEC Distances Itself From Janus and Adopts Expansive View of Rule 10b-5(a) and (c)

The SEC recently rendered an opinion in an enforcement action against two persons, John P. Flannery and James D. Hopkins, associated with an investment adviser. In so doing, it sought to limit the Supreme Court’s holding in...more

The Top 10 Obstacles to Litigating Securities Fraud Claims: Part I

Introduction: Congress passed the Securities Act of 1933, 15 U.S.C. §§ 77a et seq. (Securities Act), and the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a et seq. (Exchange Act, collectively, the Acts) following...more

Federal Court Holds That Lack of Loss Causation Is Not a Defense Under Massachusetts Blue Sky Law

The United States District Court for the District of Massachusetts recently held in Massachusetts Mutual Life Insurance Co. v. Residential Funding Co., LLC, that lack of loss causation is not available even as an affirmative...more

SEC Municipalities Continuing Disclosure Cooperation Initiative: Should A Bond Issuer Self-Report?

Municipal securities issuers have the opportunity to self-report material misstatements in official statements regarding prior compliance with continuing disclosure undertakings under a new initiative introduced by the...more

District Court Clarifies Statute of Repose Timeline in Material Misstatement Case

The US District Court for the Eastern District of New York recently dismissed a class action claim, determining the reasserted claim violated the applicable statute of repose that requires all claims be brought within three...more

Corporate and Financial Weekly Digest - Volume IX, Issue 28

In this issue: - FINRA Proposes to Adopt Rules on Quotation Requirements for OTC Equity Securities - CFTC Seeks Comment on ICE Clear Europe Portfolio Margining Proposal - New York DFS Proposes First...more

Criminal Exposure for Securities Fraud Expanded in the Fourth Circuit, Rejecting Janus for Criminal Matters

Last month, in Prousalis v. Moore (May 7, 2014), a criminal securities fraud case, the Fourth Circuit held that the Supreme Court’s interpretation of Rule 10b-5(b) in Janus Capital Group, Inc. v. First Derivative Traders...more

Seller Liability for Disclosures (or Non-Disclosures), Part 2

In our blog post dated April 29, 2013, Matthew Fischer discussed the case Lerner v. DMB Realty, LLC (Arizona Court of Appeals, November 27, 2012). In that case, the Arizona Court of Appeals addressed, among other things, the...more

Misstatements on Application for In Forma Pauperis Status Results in Dismissal of Patent Infringement Action with Prejudice

Plaintiff filed a patent infringement action and also filed an application to proceed in pro per and In Forma Pauperis. The defendants file a motion to dismiss the action based on false statements in the application....more

SEC Encourages Self-Reporting of Continuing Disclosure Misstatements

In an effort to increase enforcement of continuing disclosure obligations, the Securities and Exchange Commission (“SEC”) announced a self-reporting program on March 10, 2014, referred to as the Municipalities Continuing...more

Subjective or Objective Truth? Supreme Court to Decide What Is an “Untrue” Statement of Opinion

On Monday, the U.S. Supreme Court granted certiorari in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund (13-435), an appeal in which Omnicare has asked the Court to clarify the meaning of...more

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