Williams v. Globus Med., Inc.

2 Analyses of this case by attorneys

  1. Securities Litigation Update: First Circuit Holds That Future-Focused Risk Disclosures Are Not Misleading Absent “Grand Canyon”-Level Threat to Company

    Cadwalader, Wickersham & Taft LLPJason HalperAugust 9, 2021

    The obligation to disclose risks in public filings derives from multiple sources, including Items 105 and 303 of Regulation S-K, as well as, more generally, the “ongoing duty to avoid rendering existing statements misleading by failing to disclose material facts.” Thesling v. Bioenvision, Inc., 374 F. App’x 141, 143 (2d Cir. 2010); see 17 C.F.R. § 229.105(a) (Item 105) (“Where appropriate, provide under the caption ‘Risk Factors’ a discussion of the material factors that make an investment in the registrant or offering speculative or risky.”); 17 C.F.R. § 229.303(b)(2)(ii) (Item 303) (“Describe any known trends or uncertainties that have had or that are reasonably likely to have a material favorable or unfavorable impact on net sales or revenues or income from continuing operations.”).Williams v. Globus Med., Inc., 869 F.3d 235, 242 (3d Cir. 2017); see alsoIn re Harman Int’l Indus., Inc. Sec. Litig., 791 F.3d 90, 103 (D.C. Cir. 2015) (“[T]here is an important difference between warning that something ‘might’ occur and that something ‘actually had’ occurred.”) (citation omitted, emphasis in original); Berson v. Applied Signal Tech., Inc., 527 F.3d 982, 986 (9th Cir. 2008) (“The [disclosure] . . . speaks entirely of as-yet-unrealized risks and contingencies. Nothing alerts the reader that some of these risks may already have come to fruition, and that what the company refers to as backlog includes work that is substantially delayed and at serious risk of being cancelled altogether.”).

  2. Third Circuit Affirms Dismissal Of Putative Securities Class Action, Finds No Duty To Disclose An Event Named In A Risk Disclosure Where The Risk Did Not Materialize

    Shearman & Sterling LLPAugust 30, 2017

    On August 23, 2017, the United States Circuit Court of Appeals for the Third Circuit affirmed a district court decision dismissing a putative class action against Globus Medical, Inc. (“Globus” or the “Company”), a medical device company that designs, develops and sells musculoskeletal implants, and several individual officers. Williams v. Globus Medical, Inc., No. 16-3607 (3d Cir. Aug. 23, 2017). The lawsuit alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 based on allegations that the Company failed to disclose the termination of a distribution partnership or the impact the termination would have on its revenue projections.