Big Stakes In High Court’s Securities Fraud Omissions Case

In its October 2017 term, the U.S. Supreme Court will hear a case, Leidos Inc. v. Indiana Public Retirement System, raising fundamental questions about the nature and sources of liability for nondisclosures under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. For public companies, the practical impact of Leidos is that the court will decide if violations of U.S. Securities and Exchange Commission disclosure rules in a Form 10-K can trigger a securities class action even if nothing said in the Form 10-K is false or misleading. This could have broader implications for numerous other disclosure obligations, such as those arising under Regulation M-A.