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).
Supreme Court to Tackle Omissions Fraud Liability
April 13, 2017