By Lene Powell, J.D.
In its April 12 decision in Macquarie Infrastructure Corp. v. Moab Partners, L.P., the Supreme Court clarified that private securities fraud actions may not use “pure omissions” as the basis for certain securities fraud claims without a misleading statement.
The decision narrows potential liability for private securities fraud claims under Exchange Act Rule 10b-5(b) or Item 303 of Regulation S-K.
While consumer advocates argued that limiting claims in this way will keep important information from investors, business groups said that allowing “pure omissions” claims would flood the courts with meritless litigation second-guessing management decisions.
A new Vital Briefing by Wolters Kluwer senior legal analyst Lene Powell explains the decision and impact. Click here to access the briefing and other securities news from Wolters Kluwer on VitalLaw.com.