Corp. Code 317(i).7 The 1995 Private Securities Litigation Reform Act preempted state securities laws in class actions alleging securities fraud. 15 U.S.C. § 78u-4.8Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007).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. 15-1439.13 The Securities Litigation Uniform Standards Act of 1998, Pub. L. No. 105-353, 112 Stat.
On Tuesday, March 24, 2015, the U.S. Supreme Court issued a landmark securities decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, finding that incorrect statements of opinion provided in a registration statement give rise to liability under Section 11 of the Securities Act of 1933, 15 U.S.C. § 77k (“Section 11”), if the stated opinion is materially untrue and subjectively disbelieved by the speaker, and, in instances where omission liability is alleged, if the issuer did not have a reasonable basis for the opinion. The decision provides a welcome clarification of the standard of liability for statements of opinion under Section 11 in light of a previous circuit split and ensures that securities plaintiffs will be limited in their ability to, as the Supreme Court put it, “Monday morning quarterback an issuer’s opinions” if those opinions ultimately turn out to be wrong.Background The Securities Act of 1933 requires companies to file a registration statement containing specified information, which may include representations of fact or opinion, about the company and the securities offered in connection with public offerings.
It then will discuss its potential application to other securities laws, including, most notably, claims brought under Section 10(b) and Rule 10b-5, the latter of which contains language identical to the Section 11 language analyzed by the Court. 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.
The claims have typically included: •Claims under Sections 11 and 12(a)(2) of the Securities Act of 1933 (the “1933 Act”): These claims may be brought only by investors that purchased securities as part of the initial public offering (rather than on the secondary market or in a private transaction). See 15 U.S.C. § 77k; Gustafson v. Alloyd Co., 513 U.S. 561, 583-84 (1995). The claims do not require any proof that an investor relied on the misrepresentation or that a defendant acted with scienter or even negligence.
Nevertheless, the decision offers welcome clarity for a broad class of board observers (and private equity and venture capital funds and other third parties who often designate people to serve in such positions) as to whether there is a meaningful distinction between directors and board observers for liability purposes. 15 U.S.C. §77k(a)(3).[View source.]
119 327 F.R.D. 510 (S.D.N.Y. 2018). 120 DeMaria v. Andersen, 318 F.3d 170, 175 (2d Cir. 2003); see 15 U.S.C. § 77k(a). 121 Yi Xiang, 327 F.R.D. at 528.
Ret. Sys. v. ANZ Secs., Inc., 582 U.S. ___, 137 S. Ct. 2042 (2017) (holding American Pipe tolling does not apply to the statute of repose of the Securities Act of 1933, 15 USC §§77k(a)).See 15 USC § 78u-4(a)(3)(A)(i).
Litig., 729 F.3d 1104, 1107 (9th Cir. 2013) (holding that a company that has issued multiple offerings under multiple registration must plead “a greater level of factual specificity . . . before a court can reasonably infer that shares purchased in the aftermarket are traceable to a particular offering.”).5 15 U.S.C. § 77k(v).6; H.R. Rep. No. 104-369, at 41 (1995).7 15 U.S.C. § 78j(b).8SeeTellabs Inc. v. Makor Issues & Rights Ltd., 551 U.S. 308, 127 S.Ct. 2499, 2508 (2007).9See 15 U.S.C. § 77z-1(a)(1) (providing for private securities class action reforms brought pursuant to the Federal Rules of Civil Procedure).10 15 U.S.C. § 78aa(a).11 15 U.S.C. § 77z-1(a)(3)(B).12; 15 U.S.C. § 77z-1(a)(3)(B)(vi).13 15 U.S.C. § 77z-1(a)(4).14 15 U.S.C. § 77z-1(a)(6).15 15 U.S.C. § 77z-1(c).16 The safe harbor is codified at 15 U.S.C. § 77z-2 and 15 U.S.C. § 78 u-5.17 15 U.S.C. § 78u-4(f)(2).18Basic v. Levinson, 485 U.S. 224, 247 (1988).19Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 82 (2006) (quoting SLUSA, Pub. L. No. 105-353, § 2(b), 112 Stat.
ps://legis.delaware.gov/BillDetail/25730 (last visited Jan. 8, 2018). The definition of "stock ledger" was amended to provide that such records may be "administered by or on behalf of the corporation," DGCL § 219(c), and a corporation's records are now expressly permitted to be "kept on, or by means of . . . 1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases)," DGCL § 224 (emphasis added).4 Noelle Acheson, Equity Markets on a Blockchain: Delaware's Potential Impact, CoinDesk (July 10, 2017, 10:00 UTC), https://www.coindesk.com/equity-markets-blockchain-delawares-potential-impact/ (last visited Jan. 8, 2018).5 In contrast, the more general securities fraud provision found in Section 10(b) of the Securities Exchange Act of 1934 is not limited to material misstatements and omission in a registration statement or prospectus and does not have a tracing requirement.6DeMaria v. Andersen, 318 F.3d 170, 175-76 (2d Cir. 2003) (discussing 15 U.S.C. § 77k(a)); see also, e.g., Plichta v. SunPower Corp., 790 F. Supp. 2d 1012, 1022-23 (N.D. Cal. 2011); Caiafa v. Sea Containers Ltd., 525 F. Supp. 2d 398, 407 (S.D.N.Y. 2007).7 15 U.S.C. § 77l(a)(2); see also, e.g., Welgus v. Trinet Grp., Inc., No. 15-cv-03625-BLF, 2017 WL 6466264, at *26 (N.D. Cal. Dec. 18, 2017); In re Magnum Hunter Res. Corp. Sec.
8166 at 9. 15 U.S.C. 77k’ 15 U.S.C. 771; 15 U.S.C. 77q; 15 U.S.C. 78j(b); 17 CFR 240.10b-5. Commission Statement and Guidance on Public Company Cybersecurity Disclosures, 83 Fed. Reg.