Securities – Registration statements – opinions

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U.S. Supreme Court

Civil

Securities – Registration statements – opinions

If a registration statement omits material facts about the issuer’s inquiry into, or knowledge concerning, a statement of opinion, and if those facts conflict with what a reasonable investor, reading the statement fairly and in context, would take from the statement itself, then §11’s omissions clause creates liability.

For purposes of §11’s omissions clause, whether a statement is “misleading” is an objective inquiry that depends on a reasonable investor’s perspective. Cf. TSC Industries, Inc. v. Northway, Inc., 426 U. S. 438, 445. Omnicare goes too far by claiming that no reasonable person, in any context, can understand a statement of opinion to convey anything more than the speaker’s own mindset. A reasonable investor may, depending on the circumstances, understand an opinion statement to convey facts about the speaker’s basis for holding that view. Specifically, an issuer’s statement of opinion may fairly imply facts about the inquiry the issuer conducted or the knowledge it had. And if the real facts are otherwise, but not provided, the opinion statement will mislead by omission.
An opinion statement, however, is not misleading simply because the issuer knows, but fails to disclose, some fact cutting the other way. A reasonable investor does not expect that every fact known to an issuer supports its opinion statement. Moreover, whether an omission makes an expression of opinion misleading always depends on context. Reasonable investors understand opinion statements in light of the surrounding text, and §11 creates liability only for the omission of material facts that cannot be squared with a fair reading of the registration statement as a whole. Omnicare’s arguments to the contrary are unavailing.

719 F. 3d 498, vacated and remanded.

13-435 Omnicare, Inc., v. Laborers District Council Construction Industry Pension Fund

Kagan, J.; Scalia, J., concurring; Thomas, J., concurring.

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