AACG Published on LexisNexis: Rule 10b-5: Analyzing Omissions

AACG National Managing Director Dr. Daniel S. Levy’s and AACG Principal Dr. Pavithra Kumar’s article has been published on LexisNexis.

This article discusses the U.S. Supreme Court’s ruling in Macquarie Infrastructure Corp. v. Moab Partners L.P., 601 U.S. 257 (2024), regarding misleading omissions in violation of Rule 10b-5 (17 C.F.R. § 240.10b-5) of the Exchange Act of 1934 and identifies best practices to frame the analysis of whether omitted information is misleading.

The U.S. Supreme Court recently ruled in Macquarie that claims based on “pure omissions are not actionable under Rule 10b-5(b)” even where a U.S. Securities and Exchange Commission rule or regulation requires disclosure. Instead, to be actionable, an omission must make other separate “affirmative assertions (i.e., ‘statements made’)” misleading—a “half-truth.” Macquarie, 601 U.S. at 258.

Although the Supreme Court does not explicitly address other fundamental questions about the standards for establishing liability in Rule 10b-5 shareholder suits, its statements about why omitted information alone is not actionable under Rule 10b-5 provide a road map for what additional conditions would make the omitted information misleading.

And, according to the Supreme Court, they all relate to cake.

Read on LexisNexis

Read AACG’s Version