Partner Lyle Roberts (Washington, D.C.-Litigation), counsel George Anhang (Washington, D.C.-Litigation), and associate Billy Marsh (Dallas-Litigation), filed an amicus brief on behalf of the Washington Legal Foundation (WLF) urging the Supreme Court to grant review of the Ninth Circuit's recent opinion in Facebook, Inc. v. Amalgamated Bank and decide whether a public company's risk disclosures under Item 105 of Regulation S-K can form the basis of a viable securities fraud class action under Rule 10b-5 if they do not disclose instances in which a risk has materialized in the past.
The WLF brief urges the Supreme Court to review, and ultimately reverse, the Ninth Circuit decision, which held that a public company's risk disclosures could be false or misleading under Rule 10b-5 if they fail to disclose information about past instances in which a risk has materialized, even if that past event presents no known risk of ongoing or future business harm. As explained in the amicus brief, the Ninth Circuit's ruling could force companies to disclose extensive, immaterial information about past incidents to avoid liability, which will confuse investors and impose undue burden on public companies. The amicus brief also explains how the Ninth Circuit's decision could expose companies to frivolous securities litigation based on accurate, forward-looking risk disclosures—an outcome Congress sought to avoid when it passed the Private Securities Litigation Reform Act.
WLF is a nonprofit public-interest law firm and policy center with supporters in the U.S. Founded in 1977, WLF promotes and defends free enterprise, individual rights, limited government and the rule of law.