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    Home /  Insights /  Memos, Newsletters And Alerts /  Memo
    S&C Memos

    U.S. Supreme Court Rules on Liability for Item 303 Omissions in Shareholder Suits

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    April 12, 2024

    Court Holds Nondisclosure of Information Required by SEC Item 303 Cannot, Without More, Form the Basis of a Private Shareholder Lawsuit Under Rule 10b-5(b)

    The U.S. Supreme Court ruled today in Macquarie Infrastructure Corp. v. Moab Partners, L. P., 601 U.S. ___, 2024 WL 1588706 (2024), that a violation of Securities and Exchange Commission Item 303—which requires public companies to disclose “known trends or uncertainties” that could impact their income—cannot, in the absence of an otherwise-misleading statement, support a private lawsuit brought under SEC Rule 10b-5(b), a regulation that implements Section 10(b) of the Securities Exchange Act of 1934. In a unanimous opinion by Justice Sotomayor, the Court ruled in favor of Macquarie, reversing the Second Circuit’s decision allowing such claims to survive a motion to dismiss. The attached S&C Memo details the case’s background, the Court’s decision, and the implications going forward for businesses facing shareholder actions.

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