A recent article written by Ralph Ferrara, a litigator in Proskauer’s Washington, DC office and former General Counsel to the United States Securities and Exchange Commission, summarized and analyzed key points in a recent Supreme Court decision that clarified the extent to which investors may sue companies over statements of opinion made in registration documents.
Writing about the 2015 high court decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, Ferrara summarized the findings and implications of the case. Section 11 of the Securities Act of 1933 allows a buyer of securities to file suit against the issuer if a registration statement contains an untrue statement of material fact, or omits certain material facts that would influence a buyer's decision.
Ferrara outlined the court's nuanced opinion in the class action case. The court articulated limitations on investors’ ability to bring action against issuers’ good-faith statements of opinion, while emphasizing that it was not establishing a wide-ranging means of avoiding omissions-related liability. The decision held that issuers’ opinion statements must be evaluated in context, and in light of the conclusions a reasonable investor would draw from them, and that issuers could better protect themselves by stating the basis for an opinion and by including relevant arguments that might contradict that opinion, though they are not required to do so.
Ralph Ferrara and other Proskauer lawyers frequently post articles analyzing matters of interest to their clients and the general public on the firm’s website at www.proskauer.com.
