This alert also will address Omnicare’s potential implications for issuers, underwriters, auditors, and others who assist with or consent to being named in a registration statement.The Omnicare DecisionSection 11 of the Securities Act of 1933 provides a cause of action when a registration statement “contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.” 15 U.S.C. § 77k(a) (emphasis added). Omnicare arose from a series of regulatory issues faced by the defendant, a pharmacy-services company, regarding alleged illegal kickbacks from pharmaceutical manufacturers and false claims submitted to Medicare and Medicaid.

nd-user demand, but least in the petroleum segment of its operations,” which includes the storage of No. 6 fuel oil. See Consolidated Class Action Complaint for Violations of the Federal Securities Laws, ¶ 232, ECF No. 56, City of Riviera Beach Gen. Emps. Ret. Sys. v. Macquarie Infrastructure Corp., No. 18-CV-3608 (VSB) (S.D.N.Y. Feb. 20, 2019).17Macquarie, 2022 WL 17815767, at *4 (citation omitted).18Id. (citing Meyer v. JinkoSolar Holdings Co., 761 F.3d 245, 251 (2d Cir. 2014)).19Id.20Id. The Second Circuit subsequently denied defendants’ petition for rehearing by an en banc Second Circuit. Order, Macquarie, No. 21-2524 (2d Cir. Jan. 27, 2023).21Macquarie Infrastructure Corp. v. Moab Partners, L.P., 144 S. Ct. 479 (2023).22 Macquarie, 2024 WL 1588706, at *2.23Id. 24Id. at *5.25 17 C.F.R. § 240.10b–5(b).26Macquarie, 2024 WL 1588706, at *5.27Id. at *4 (quoting Universal Health Servs, Inc. v. United States ex rel. Escobar, 579 U.S. 176, 188 (2016).28Macquarie, 2024 WL 1588706, at *4.29 15 U.S.C. § 77k(a) (emphasis added).30Macquarie, 2024 WL 1588706, at *5.31Id.32 Id.33Id. (quoting Basic Inc. v. Levinson, 485 U.S. 224, 239 n.17 (1988)).34Id. at *6.35Stratte-McClure, 776 F.3d at 101.36Id. (quoting Glazer v. Formica Corp., 964 F.2d 149, 157 (2d Cir. 1992)).37In re NVIDIA Corp. Sec. Litig., 768 F.3d 1046, 1054 (9th Cir. 2014); accord Oran v. Stafford, 226 F.3d 275, 288 (3d Cir. 2000) (Item 303 “does not automatically give rise to a material omission under Rule 10b-5”); Carvelli, 934 F.3d at 1331 (“On its face, Item 303 imposes a more sweeping disclosure obligation than Rule 10b-5, such that a violation of the former does not ipso facto indicate a violation of the latter.”).38In re NVIDIA, 768 F.3d at 1054 (quoting Matrixx Initiatives, 131 S Ct. at 1321-22).39 Reply Br. for Petitioners, No. 22-1165, at 5 (Aug. 28, 2023).40Stratte-McClure, 776 F.3d at 107-08.41Macquarie, 2022 WL 17815767, at *4 (citation omitted).42Macquarie, 2024 WL 1588706, at *5 n.2.43Id. at *5.44 15 U.S.C. § 77k(a).45

ourt rejected plaintiff’s argument that information from other sources could not be incorporated into the registration statement, finding that the complaint made “clear that membership did not decline. It had surged during the pandemic to 51.5 million members in a six-month period at the beginning of 2020 and it remained at 51.8 million at the end of 2020….”32 “Thus,” concluded the motion court, “it [did] not matter that the [registration statement] disclaimed that investors could not rely on information not incorporated into the [registration statement (as registration statements typically provide) because this alleged omission of interim membership rate growth and membership pipeline activity was not material and [was] simply not actionable.”33FootnotesItem 303, 17 C.F.R. § 229.303. See also Litwin v. Blackstone Grp., L.P., 634 F.3d 706, 716 (2d Cir. 2011).Item 105, 17 C.F.R. §229.105. See also Citiline Holdings, Inc. v. iStar Financial Inc., 701 F. Supp. 2d 506, 514 (S.D.N.Y. 2010).15 U.S.C. § 77k(a).Hutchison v. Deutsche Bank Sec. Inc., 647 F.3d 479, 484 (2d Cir. 2011).Fed. Hous. Fin. Agency for Fed. Nat’l Mortg. Ass’n v. Nomura Holding Am., Inc., 873 F.3d 85, 99 (2d Cir. 2017) (quoting, NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145, 156 (2d Cir. 2012)).Basic Inc. v. Levinson, 485 U.S. 224, 236 (1988).Ganino v. Citizens Utils. Co., 228 F.3d 154, 162 (2d Cir. 2000) (quoting, Basic, 485 U.S. at 231-32).In the Matter of Netshoes Sec. Litig., 64 Misc. 3d 926 (Sup. Ct., N.Y. County 2019); Nadoff v. Duane Reade, Inc., 107 Fed. App’x 250, 252 (2d Cir. 2004).In re Morgan Stanley Info. Fund Sec. Litig., 592 F.3d 347, 359 (2d Cir. 2010).See 15 U.S.C. § 77k(e) (“[I]f the defendant proves that any portion or all of such damages represents other than the depreciation in value of such security resulting from [the alleged misstatement or omission], such portion of or all such damages shall not be recoverable.”).Fed. Hous. Fin. Agency, 873 F.3d at 154 (alterations and inte

quoting SEC Interpretive Release, at *6).Id. at *3 (quoting SEC Interpretive Release, at *6).Id. (citing Stratte-McClure, 776 F.3d at 102–03).Oran v. Stafford, 226 F.3d 275, 288 (3d Cir. 2000) (quoting Basic Inc. v. Levinson, 485 U.S. 224, 238 (1988)).Id.In re NVIDIA Corp. Sec. Litig., 768 F.3d 1046, 1054 (9th Cir. 2014) (quoting Basic, 485 U.S. at 239 n.17 and Matrixx Intiatives, Inc. v. Siracusano, 563 U.S. 27, 44–45 (2011)).Id. at 1056.Id. The Eleventh Circuit has expressed its agreement with both the Third and Ninth Circuits because “[o]n its face, Item 303 imposes a more sweeping disclosure obligation than Rule 10b-5, such that a violation of the former does not ipso facto indicate a violation of the latter.” Carvelli v. Ocwen Fin. Corp., 934 F.3d 1307, 1331 (11th Cir. 2019); see also Mun. Employees’ Ret. Sys. of Michigan v. Pier 1 Imports, Inc., 935 F.3d 424, 436 (5th Cir. 2019) (“We have never held that Item 303 creates a duty to disclose under the Securities Exchange Act[.]”). 15 U.S.C. §§ 77k, 77l(a)(2). Section 11 imposes strict liability on issuers and signatories, and negligence liability on underwriters, “[i]n case any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.” 15 U.S.C. § 77k(a). Section 12(a)(2) imposes liability under similar circumstances for misstatements or omissions in a prospectus. See id. § 77l(a)(2).See Panther Partners, 681 F.3d at 120.NVIDIA, 768 F.3d at 1055.Id. at 1055–56 (quoting Panther Partners, 681 F.3d at 120).NVIDIA, 768 F.3d at 1056.Stratte-McClure, 776 F.3d at 102. 964 F.2d 149, 157 (2d Cir. 1992). 910 F.2d 10, 12 (1st Cir. 1990).Glazer, 964 F.2d at 157 (quoting Backman, 910 F.2d at 12 (quoting Roeder v. Alpha Industries, Inc., 814 F.2d 22, 27 (1st Cir. 1987))).See, e.g., In re Synchrony Fin. Sec. Litig., 988 F.3d 157, 167 (2d Cir. 2021) (citing Str

impossible to distinguish the previously registered shares from the unregistered shares that start to get sold into the market by company insiders who were previously subject to lock-up agreements. In contrast, the shares made available through a direct listing are sold directly to the public and not through a bank, so there is no lock-up agreement restricting the sale of unregistered shares. Thus, from the first day of a direct listing, both registered and unregistered shares may be sold to the public and, consequently, the tracing problems which exist in a traditional underwritten IPO after the expiration of the lock-up exist from day one in a direct listing.The distinction in offering forms has potentially serious ramifications for shareholders who wish to sue under Sections 11 and 12(a) of the Securities Act. While both sections of the Securities Act impose strict liability for any “untrue statement of a material fact or [omission of] a material fact,” in a registration statement (15 U.S.C. §77k(a)) or “prospectus” (id. at §77l(a)(2)), the Securities Act limits the class of plaintiffs who can sue: Section 11 provides standing only to “any person acquiring such security” (id. at §77k(a)), while Section 12 provides standing only “to the person purchasing such security” (id. at § 77l(a)). Prior to the Ninth Circuit’s decision in Slack, every Court of Appeal to consider the issue had interpreted the statutory language “such security” to mean that, in order to have standing, a shareholder needed to prove that its shares were issued under the allegedly false or misleading registration statement at-issue. However, unlike in a direct listing, each of those cases (as both the majority and dissent note in Slack) involved successive registrations “whereby a company issues a secondary offering to the public such that there are multiple registration statements under which a share may be registered, and other tracing challenges stemming from an IPO.” If interpreted narrowly to direct listings

See Order Approving a Proposed Rule Change to Modify the Provisions Relating to Direct Listings, Exchange Act Release No. 34-90768, 85 Fed. Reg. 85,807, 85,808 (Dec. 29, 2020).6 Shares may be exempt from registration if they meet certain enumerated requirements set forth in Rule 144, including a minimum holding period and adequate publicly available information about the issuer. See 17 C.F.R. § 230.144; see also SEC Investor Publication, Rule 144: Selling Restricted and Control Securities (Jan. 16, 2013), https://www.sec.gov/reportspubs/investor-publications/investorpubsrule144htm.html.7 15 U.S.C. § 77k(a) (“In case any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, any person acquiring such security . . . may, either at law or in equity, in any court of competent jurisdiction, sue . . . .”).8 15 U.S.C. § 77l(a)(2) (“Any person who-- . . . offers or sells a security . . . by the use of any means or instruments of transportation or communication in interstate commerce or of the mails, by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading . . . shall be liable . . . to the person purchasing such security from him . . . .”).9 The word “prospectus” is a “term of art” that refers to “a document solic

The distinction in offering forms has potentially serious ramifications for shareholders who wish to sue under Sections 11 and 12(a) of the Securities Act. While both sections of the Securities Act impose strict liability for any “untrue statement of a material fact or [omission of] a material fact,” in a registration statement (15 U.S.C. §77k(a)) or “prospectus” (id. at §77l(a)(2)), the Securities Act limits the class of plaintiffs who can sue: Section 11 provides standing only to “any person acquiring such security” (id. at §77k(a)), while Section 12 provides standing only “to the person purchasing such security” (id. at § 77l(a)). Prior to the Ninth Circuit’s decision in Slack, every Court of Appeal to consider the issue had interpreted the statutory language “such security” to mean that, in order to have standing, a shareholder needed to prove that its shares were issued under the allegedly false or misleading registration statement at-issue.

Rule 12b-2 provides that control may be established by showing that the defendant possessed “the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.” 17 C.F.R. §240.12b-2; see alsoS.E.C. v. First Jersey Sec., Inc., 101 F.3d 1450, 1472-73 (2d Cir. 1996) (affirming the district court’s conclusion that the CEO and owner of First Jersey Securities was personally liable under Section20(a) of the Exchange Act given his hands-on management of the firm).See 15 U.S.C. §§77k, 77l. To state a claim under Section 11(a) of the Securities Act, a plaintiff must plead that: “(1) she purchased a registered security, either directly from the issuer or in the aftermarket following the offering; (2) the defendant participated in the offering in a manner sufficient to give rise to liability under section 11; and (3) the registration statement ‘contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.’

36 While such an as-applied challenge may at some point be made, in the main, the decision places FPPs on solid ground with respect to typical shareholder litigation under the 1933 Act—notably, including with respect to shareholder claims against the company’s officers and directors arising out of an IPO, which falls squarely within the scope of Section102(b)(1).371Salzberg v. Sciabacucchi, No. 346, 2019, 2020 WL 1280785 (Del. Mar. 18, 2020).2 15 U.S.C. § 77e.3 15 U.S.C. § 77k(a).4 15 U.S.C. § 77v(a).5Id.6Cyan, Inc. v. Beaver Cty. Emps. Ret. Fund, 138 S. Ct. 1061, 1066 (2018).7 15 U.S.C. § 77p(b).

9 Cornerstone Research, Securities Class Action Filings,2017 Midyear Assessment, available at https://www.cornerstone.com.10 Section 11, 15 U.S.C. § 77k; Section 12, 15 U.S.C. § 77l.11 Section 11(b)(1); 15 U.S.C. § 77k(b)(1); Section 12(a)(2), 15 U.S.C. § 77l(a)(2).12Cyan, Inc. v. Beaver County Employees Retirement Fund, Case No. 15-1439.