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U.S. Supreme Court clarifies liability for opinions in registration statements

By Porter Wright on

Opinions in registration statements continue to be one of the most commonly litigated items under Section 11 of the Securities Act of 1933 (“Section 11”). On March 24, 2015, the U.S. Supreme Court in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund clarified a lower court split in the application of Section 11 to opinions in registration statements. The court held, in pertinent part:

1. A statement of opinion does not constitute an “untrue statement of … fact” simply because the stated opinion ultimately proves incorrect. Rather, for an opinion to constitute an “untrue statement of … fact” under Section 11, the opinion expressed must not have been sincerely held by the registrant

2. Section 11 liability only attaches to an omission of material fact in a registration statement if both (i) the registration statement omits material facts about the issuer’s inquiry into, or knowledge concerning, a statement of opinion, and (ii) those facts conflict with what a reasonable investor, reading the statement fairly and in context, would take from the statement itself.…

Supreme Court refuses to review FCPA challenge

By Porter Wright on

The U.S. Supreme Court on Monday refused to review the first Foreign Corrupt Practices Act (FCPA) case appealed to the highest Court. The appeal sought to limit the scope of the FCPA by narrowing the law’s definition of the term “foreign official.”

Joel Esquenazi and Carlos Rodriguez, former executives of Terra Telecommunications Corp., had challenged their convictions under the FCPA and had asked the Supreme Court to clarify who counted as a foreign official under the law. The Eleventh Circuit had affirmed the conviction and the ruling that defined the term instrumentality as “any entity controlled by the government of a foreign country that performs a function the controlling government treats as its own.”…

U.S. Supreme Court Hears Oral Arguments in Arbitration Case

By Bob Tannous on

I wanted to take a moment to share another interesting article from our litigation colleague, Brodie Butland. In late November, I shared Brodie’s article “The Case Influencing the Future of Arbitration,” which discusses BG Group PLC v. Republic of Argentina — an international arbitration case that has the potential to affect the practice of arbitration, international investment and the standing of the United States as a premier international forum for arbitration.

On Dec. 2, 2013, the U.S. Supreme Court heard oral arguments for the case. Though the decision will not be rendered until later this year, the oral argument revealed much about the justices’ views of the case. In a follow-up to his previous article, Brodie discusses what he believes to be the key takeaways from the oral argument.

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The Case Influencing the Future of Arbitration

By Bob Tannous on

Our colleague and member of the firm’s Litigation Department, Brodie Butland, recently wrote an interesting article for the The Business Suit, published by DRI. Because the article concerns the international arbitration case BG Group PLC v. Republic of Argentina as well as its implications for anyone facing or considering arbitration (regardless of venue), I wanted to take a moment to share it with you. Certainly, the  decision will have an impact on many industries.

Summary Ostensibly, BG Group PLC v. Republic of Argentina is an international arbitration case based on a bilateral investment treaty between the United Kingdom and Argentina. But there is a significant chance that the U.S. Supreme Court will use the case to clarify several decades of precedents dealing with whether the issue of arbitrability is decided by a court or an arbitrator. Regardless, the court’s decision is likely to affect the practice of arbitration, international investment and the standing of the United States as a premier international forum for arbitration.  Read the full article — “BG Group PLC v. Republic of Argentina: One of the Most Significant Business Cases that You Have Never Heard of”…

Supreme Court Grants Cert To Determine If Plaintiff Must Prove Materiality Before Certifying Class in Securities Fraud Class Action

By Porter Wright on

On Monday, June 11, 2012, the Supreme Court granted a Writ of Certiorari in Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds, No. 11-1085 (U.S. Jun. 11, 2012) to decide whether, in a misrepresentation case under SEC Rule l0b-5, the court must require proof of materiality before certifying a plaintiff class based on the fraud-on-the-market theory (and whether the court must allow the defendants to present evidence rebutting the applicability of the fraud-on-the-market theory before certifying the class).…

U.S. Supreme Court Rejects Argument That Claims Under § 16(b) Are Tolled Until a § 16(a) Disclosure Statement is Filed

By Porter Wright on

The U.S. Supreme Court ruled today that the two-year time limit for bringing an action under § 16(b) of the Securities Exchange Act of 1934 is not tolled until after the filing of a § 16(a) disclosure statement. The case involves the right of an issuer (or, in this case, a shareholder bringing a derivative suit) to recover short swing profits obtained by a beneficial owner, director, or officer by reason of his relationship to the issuer under Exchange Act 16(b). Under §16(b), a corporation (or shareholder) may bring an action against corporate insiders who realize profits from the purchase and sale of the corporation’s securities within any 6-month period. The Act provides that such suits must be brought within "two years after the date such profit was realized." The Supreme Court vacated a January 2011 decision by the Ninth Circuit that a § 16(b) claim is subject to tolling and remanded the case to the District Court for further proceedings (including consideration of other equitable tolling principles).…

Supreme Court To Hear Securities Case Regarding Section 16(b) Claims Regarding Short Swing Profits

By Porter Wright on

On Monday, June 27, 2011, the Supreme Court granted Certiorari in Credit Suisse Securities (USA) LLC v. Simmonds, Case No. 10-1261. The case involves the right of an issuer (or, in this case, a shareholder bringing a derivative suit) to recover short swing profits obtained by a beneficial owner, director, or officer by reason of his relationship to the issuer under Exchange Act 16(b).…

Supreme Court Holds That Mutual Fund Investment Adviser Is Not Liable For Statements By the Mutual Fund In The Fund’s Prospectus

By Porter Wright on

Today, the Supreme Court ruled that a mutual fund investment adviser cannot be held liable for the statements in a prospectus made by the adviser’s client (the mutual fund itself). Janus Capital Group, Inc. v. First Derivative Traders, No. 09-525, slip op. (Jun. 13, 2011). In doing so, the Court rejected the argument of the Government in an amicus brief that a private plaintiffs should be permitted to sue a person who provides false or misleading information to another person, who then includes that information in a statement. A copy of the opinion is available on the Supreme Court’s website.…

Supreme Court Holds That Securities Fraud Plaintiffs Do Not Need to Prove Loss Causation In Order to Obtain Class Certification

By Porter Wright on

In order to prevail in a private securities fraud action, a plaintiff must demonstrate that defendants’ deceptive conduct caused his or her economic loss – a concept known as "loss causation." Today, the Supreme Court unanimously ruled that class action plaintiffs do not need to prove loss causation in order to obtain class certification. Erica P. John Fund, Inc. v. Halliburton, Inc., No. 09-1403, slip op. (Jun. 6, 2011).  A copy of the opinion is available on the Supreme Court’s website.…

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