Supreme Court to Tackle Omissions Fraud Liability

The United States Supreme Court has granted certiorari in a case that could have a significant impact on the law under Section 10(b) of the Securities Exchange Act of 1934 and accompanying Rule 10b-5 as they relate to matters omitted from public disclosures. In Leidos, Inc. v. Indiana Public Retirement System, No. 16-581, the Supreme Court will take up the question of whether the Second Circuit erred in holding — in direct conflict with the decisions of the Third and Ninth Circuits — that Item 303 of SEC Regulation S-K creates a duty to disclose that is actionable under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. (Emphasis added). Thus, the petition raises the momentous question of whether a Section 10(b) claim can be premised upon the failure to comply with an SEC disclosure regulation (or, possibly, any other regulatory rule).