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Securities Litigation

Omnicare v. Laborers District Council Construction Industry Pension Fund - Post-Decision SCOTUScast

SCOTUScast 4-22-15 featuring George Conway
George T. Conway III April 22, 2015

On March 24, 2015, the Supreme Court decided Omnicare v. Laborers District Council Construction Industry Pension Fund. This case concerns Section 11 of the Securities Act of 1933, which authorizes suit by a purchaser of securities issued under a registration statement filed with the Securities and Exchange Commission if the registration statement “contained an untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statement therein not misleading.”

The question here is whether a Section 11 plaintiff may plead that a statement of opinion was “untrue” merely by alleging that the opinion itself was objectively wrong, as the Sixth Circuit concluded in this case, or whether the plaintiff also must allege that the statement was subjectively false – requiring allegations that the speaker’s genuinely held opinion was different from the one expressed – as the Second, Third, and Ninth Circuits have held.

By a vote of 9-0 the Court vacated the judgment of the Sixth Circuit and remanded the case. In an opinion delivered by Justice Kagan, the Court held that a statement of opinion does not constitute an “untrue statement of . . . fact” for purposes of Section 11 simply because the stated opinion ultimately proves incorrect. Even so, the Court allowed that an omission could make an expression of opinion misleading if a reasonable investor would find that the facts omitted could not be squared with a fair reading of the registration statement as a whole.  The Sixth Circuit must reassess plaintiff’s claim on remand applying this standard, the Court explained.

Justice Kagan's opinion was joined by the Chief Justice and Justices Kennedy, Ginsburg, Breyer, Alito, and Sotomayor. Justice Scalia filed an opinion concurring in part and concurring in the judgment.  Justice Thomas also filed an opinion concurring in the judgment.

To discuss the case, we have George Conway, who is a partner in the Litigation Department of Wachtell, Lipton, Rosen & Katz.

Shifting from District Court Action to Administrative Proceedings at the Securities and Exchange Commission - Podcast

Litigation and Corporations, Securities, and Antitrust Practice Groups Podcast
Matthew T. Martens April 21, 2015

Over the course of the last year, various SEC officials have stated publicly that the agency intends to bring more of its litigated enforcement cases in administrative proceedings rather than in federal district court. The SEC points to the recent expansion of its authority under Dodd-Frank to bring such administrative proceedings. The defense bar has responded by filing lawsuits seeking to block these administrative proceedings and force the agency to bring any enforcement action in federal court. Commentators have also written op-eds and given speeches criticizing the agency's approach as misguided policy. And recently, Congress has weighed in by questioning SEC officials about this new approach during oversight hearings. Matthew Martens (a securities enforcement partner at WilmerHale and the former SEC Chief Litigation Counsel) discussed these recent developments, including a review of the constitutional arguments the defense bar has raised to administrative proceedings, the procedural differences between administrative proceedings and district court actions, and the tactical challenges that administrative proceedings present to potential defendants.

  • Matthew T. Martens, Partner, WilmerHale

Omnicare v. Laborers District Council Construction Industry Pension Fund - Post-Argument SCOTUScast

SCOTUScast 11-11-14 featuring George Conway
George T. Conway III November 11, 2014

On November 3, 2014, the Supreme Court heard oral argument in Omnicare v. Laborers District Council Construction Industry Pension Fund. This case concerns Section 11 of the Securities Act of 1933, which authorizes suit by a purchaser of securities issued under a registration statement filed with the Securities and Exchange Commission--if the registration statement “contained an untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statement therein not misleading.”

The question here is whether a Section 11 plaintiff may plead that a statement of opinion was “untrue” merely by alleging that the opinion itself was objectively wrong, as the Sixth Circuit has concluded, or whether the plaintiff also must allege that the statement was subjectively false – requiring allegations that the speaker’s genuinely held opinion was different from the one expressed – as the Second, Third, and Ninth Circuits have held.

To discuss the case, we have George Conway, who is a partner in the Litigation Department of Wachtell, Lipton, Rosen & Katz.

Fraud on the Market: Halliburton v. Erica P. John Fund Decided - Podcast

Corporations, Securities & Antitrust and Litigation Practice Groups Podcast
George T. Conway III July 17, 2014

On Monday, June 23, 2014 the Supreme Court issued a 9-0 decision in the highly anticipated securities fraud case Halliburton v. Erica P. John Fund. The case offered the Court an opportunity to revisit its 1988 decision in Basic v. Levinson, in which it adopted the “fraud on the market” doctrine. Fraud on the market is critical to modern securities fraud class action lawsuits -- the doctrine assumes that any misrepresentations of a security traded in an efficient market will affect that security’s market price and thus affect any shareholders trading in reliance of market price, an assumption that precludes consideration of whether potential class members actually heard and acted on fraudulent statements. The Court declined to overturn Basic; our expert discussed the reasoning and impact of the decision.

  • George T. Conway III, Partner, Wachtell, Lipton, Rosen & Katz