Securities Regulation -- 2017



Leidos, Inc. v. Indiana Pub. Ret. Sys. v. Indiana Pub. Ret. Sys.   (U.S. Supreme Court)

Liability for securities fraud under Section 10(b)

The NAM filed two amicus briefs in the U.S. Supreme Court in this case concerning the U.S. Court of Appeals for the Second Circuit’s ruling on liability for securities fraud under Section 10(b) of the Securities Exchange Act of 1934 based on a failure to disclose adverse “trends” and “uncertainties” in the “Management Discussion & Analysis” section of Item 303. The Second Circuit extended the private right of action to omissions of material fact that do not render a statement misleading. Many manufacturers are publicly traded companies and this ruling could expose manufacturers to increasing liability. The NAM’s brief argued that manufacturers may be subject to private suits for securities fraud for failing to disclose information that may not be material and could be exposed to “fraud-by-hindsight” litigation if shrewd plaintiffs allege that an event was known to management as being reasonably likely to occur. The Supreme Court did not hear the case because the parties settled.


Related Documents:
NAM brief on the merits  (June 28, 2017)
NAM brief supporting review  (November 30, 2016)