Laura Anthony, Esq.’s Post

In Macquarie Infrastructure Corp. v. Moab Partners, the Court stated “[A] pure omission occurs when a speaker says nothing, in circumstances that do not give any special significance to that silence. Half truths, on the other hand, are “representations that state the truth only so far as it goes, while omitting critical qualifying information.” The Court continued: “[R]ule 10b–5(b) requires disclosure of information necessary to ensure that statements already made are clear and complete. Logically and by its plain text, Rule 10b–5(b) therefore covers half truths, not pure omissions, because it requires identifying affirmative assertions (i.e., “statements made”) before determining if other facts are needed to make those statements “not misleading.” The court did note however, that other provisions in the securities laws can give rise to liability for pure omissions including Securities Act Section 11 which prohibits any registration statement from omitting to state a material fact required to be stated therein. #SecuritiesLawBlog #USSupremeCourt #ALCLAW

In Macquarie Infrastructure Corp. v. Moab Partners, the Court stated “[A] pure omission occurs when a speaker says nothing, in circumstances that do not give any special significance to that silence. Half truths, on the other hand, are “representations that state the truth only so far as it goes, while omitting critical qualifying information.” The Court continued: “[R]ule 10b–5(b) requires disclosure of information necessary to ensure that statements already made are clear and complete. Logically and by its plain text, Rule 10b–5(b) therefore covers half truths, not pure omissions, because it requires identifying affirmative assertions (i.e., “statements made”) before determining if other facts are needed to make those statements “not misleading.” The court did note however, that other provisions in the securities laws can give rise to liability for pure omissions including Securities Act Section 11 which prohibits any registration statement from omitting to state a material fact required to be stated therein. #SecuritiesLawBlog #USSupremeCourt #ALCLAW

In Macquarie Infrastructure Corp. v. Moab Partners, the Court stated “[A] pure omission occurs when a speaker says nothing, in circumstances that do not give any special significance to that silence. Half truths, on the other hand, are “representations that state the truth only so far as it goes, while omitting critical qualifying information.” The Court continued: “[R]ule 10b–5(b) requires disclosure of information necessary to ensure that statements already made are clear and complete. Logically and by its plain text, Rule 10b–5(b) therefore covers half truths, not pure omissions, because it requires identifying affirmative assertions (i.e., “statements made”) before determining if other facts are needed to make those statements “not misleading.” The court did note however, that other provisions in the securities laws can give rise to liability for pure omissions including Securities Act Section 11 which prohibits any registration statement from omitting to state a material fact required to be stated therein. #SecuritiesLawBlog #USSupremeCourt #ALCLAW

Interesting article on 12.4.24 U.S. Supreme Court decision Macquarie Infrastructure Corp. v. Moab Partners: found unanimously that “pure omissions are not actionable under Rule 10b-5(b).” In other words, a pure omission (i.e., where a speaker says nothing) cannot support a private claim under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b–5, even if such an omission could constitute a violation of Item 303 of Regulation S-K.

On April 12, 2024, the Supreme Court unanimously held in Macquarie Infrastructure Corporation v. Moab Partners that the pure omission of certain public disclosures required by the SEC’s rules cannot form the basis of a private action under Rule 10b-5 under the Securities Exchange Act of 1934.   The decision puts to rest, for now, a series of claims attempting to hold public companies liable for the failure to describe in their Management’s Discussion and Analysis of Financial Condition and Results of Operations certain “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” as required by Item 303 of Regulation S-K.   Here, Corey Chivers and Leigh Dannhauser discuss the decision: https://lnkd.in/eAA_vxWg   Our Appeals and Strategic Counseling practice previously discussed this decision in their SCOTUS Term in Review: https://lnkd.in/eMqwu6nR

On Friday the Supreme court ruled unanimously in the case between Macquarie Infrastructure Corp. vs Moab Partners that investors cannot sue public companies for omitting key information. According to the decision, SEC rule 10b-5(b) says that a public issuer cannot make “any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.” This wording, according to the court, means omissions are only an issue if they make affirmative statements made misleading. Will this open up a can of worms for bad behaviour by public issuers? It should be noted that it does not prevent the Securities and Exchange Commission from taking enforcement actions for such omissions. Although in Canada enforcement seems to be lacking to begin with from regulators so the courts are an individuals best bet. Although this would allow precedence to public issuers to use in court which is alarming.

In Macquarie Infrastructure Corp. v. Moab Partners, the U.S. Supreme Court recently resolved a split among U.S. Circuit Courts of Appeal when it unanimously held that a “pure omission”—failing to disclose information in the absence of an inaccurate, incomplete, or misleading statement—cannot support a private right of action under the U.S. securities law anti-fraud provisions, Section 10(b) of the Securities and Exchange Act of 1934 and its implementing regulation, Securities and Exchange Commission Rule 10b-5(b). The case background: Macquarie Infrastructure Corporation operates terminals to store bulk liquid commodities, including No. 6 fuel oil, which contains a sulfur content close to 3%. In 2016, the United Nations International Maritime Organization adopted IMO 2020, which capped the sulfur content of fuel oil used in shipping at 0.5%. Macquarie never disclosed the provisions or its potential impact in its public offering documents in the following years. In February 2018, however, Macquarie announced a drop in demand for fuel storage at its subsidiary, in part, due to IMO 2020’s impact. As a result, Macquarie’s stock price dropped 41%, with investors Moab Partners, L.P. suing Macquarie alleging Macquarie violated Section 10(b) of the Securities and Exchange Act of 1934 (1934 Act), and its implementing regulation, SEC Rule 10b-5(b). Moab argued Macquarie’s public statements were false and misleading given it hid from investors that No. 6 fuel oil would be significantly—and negatively—impacted by IMO 2020. The District Court dismissed Moab’s complaint, but the U.S. Supreme Court issued a unanimous opinion vacating and remanding the Second Circuit’s decision, holding simply that pure omissions are not actionable under Rule 10b-5(b). Read the full details and how the ruling compares to Canadian case law: https://bit.ly/3QmcuCb #litigation #disputeresolution #capitalmarkets #boardadvisory #governance Erica Goldman | Andrew Gray | Glen Johnson

The Supreme Court’s decision in Macquarie Infrastructure Corp. v. Moab Partners, holding that “pure omissions” are not actionable under SEC Rule 10b-5(b), has received a great deal of attention for its impact on the disclosure obligations of public companies, but Neal Pandozzi says municipal issuers should also pay attention to the decision. In our client alert, Neal discusses the Court’s decision and what it means for municipal issuers’ obligations https://lnkd.in/eCBQ3xaw #PublicFinance #Disclosure #MunicipalSecurities #Municipalities

In this exclusive blog, lawyers from Herbert Smith Freehills explain more about the Pre-application Prospectus and what the changes mean for NSIPs.