materiality

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This case asks the Supreme Court to clarify whether a defendant in a securities class action may rebut the Basic presumption by pointing to the generic nature of the misstatements and by showing that those misstatements did not affect the price of the defendant’s securities. Goldman Sachs Group Inc. argues that courts must consider evidence of the generality of alleged misstatements when determining whether to certify a shareholder class in a securities class action suit. Goldman further argues that defendants only bear the burden of producing some proof that their misstatement did not negatively impact the stock price, while plaintiffs bear the burden of persuading the Court that investors relied on the defendant’s alleged misstatements. The Arkansas Teacher Retirement System counters that the lower courts properly weighed the evidence presented at the class certification stage of the litigation, including the generic nature of the misstatements, when it decided to grant certification of plaintiffs’ shareholder class. ATRS also argues that the defendants implicitly bear both the burden of production and the burden of persuasion when rebutting the presumption because they must make a showing that the particular misrepresentation at issue did not affect the stock’s market price. The outcome of this case will have implications on the availability of class-action lawsuits for investors and the risk of class-action litigation for corporate defendants.

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This case asks the Supreme Court to clarify whether a defendant in a securities class action may rebut the Basic presumption by pointing to the generic nature of the misstatements and by showing that those misstatements did not affect the price of the defendant’s securities. Goldman Sachs Group Inc. argues that courts must consider evidence of the generality of alleged misstatements when determining whether to certify a shareholder class in a securities class action suit. Goldman further argues that defendants only bear the burden of producing some proof that their misstatement did not negatively impact the stock price, while plaintiffs bear the burden of persuading the Court that investors relied on the defendant’s alleged misstatements. The Arkansas Teacher Retirement System counters that the lower courts properly weighed the evidence presented at the class certification stage of the litigation, including the generic nature of the misstatements, when it decided to grant certification of plaintiffs’ shareholder class. ATRS also argues that the defendants implicitly bear both the burden of production and the burden of persuasion when rebutting the presumption because they must make a showing that the particular misrepresentation at issue did not affect the stock’s market price. The outcome of this case will have implications on the availability of class-action lawsuits for investors and the risk of class-action litigation for corporate defendants.

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This case asks the court to determine whether investors may bring a private claim against an issuer under § 10(b) of the Securities Exchange Act of 1934 for an omission without an associated misleading statement, known as a “pure omission,” based on the disclosure requirements set by Item 303 of SEC Regulation S-K. Macquarie Infrastructure Corporation argues that investors cannot bring a private claim for a pure omission because the text and statutory context of § 10(b), Rule 10b-5, and Item 303 do not support such claims. In opposition, Moab Partners, L.P. argues that investors may bring a private claim for a pure omission because Supreme Court precedent and statutes comparable to § 10(b) indicate that investors may bring such claims. This case touches on important questions regarding disclosure requirements, issuer liability for omissions, and the suitability of enforcement of securities regulations through private lawsuits.

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Petitioners, Matrixx Initiatives Inc. and three of its officers (“Matrixx”), argue that the Ninth Circuit erred in allowing respondents, James Siracusano and other Matrixx shareholders (“Siracusano”), to sue under the Securities and Exchange Act of 1934 for Matrixx’s alleged failure to share product information with its shareholders. Specifically, Siracusano claims that Matrixx should have disclosed so-called adverse event reports that linked one of its products, Zicam Cold Remedy (“Zicam”), to anosmia, a condition that affects an individual’s ability to smell. Supreme Court precedent provides that, as part of the plaintiff’s case in showing a securities violation, the plaintiff must establish that the defendant misrepresented or omitted a material fact. In arguing that it was not required to disclose the studies, Matrixx relies on a statistical significance standard in determining whether the studies linking the drug to anosmia were material. Siracusano rejects the statistical significance standard, arguing that Matrixx should have shared such studies with investors regardless of the significance of the statistical correlation between Zicam and anosmia. The Ninth Circuit rejected the statistical significance standard and engaged in a factual analysis of Siracusano’s claims, finding that the allegations were sufficient. The Supreme Court will decide whether shareholders' ability to state a claim turns on the statistical significance of the withheld information, or whether a factual analysis is required.

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