Thad Behrens in Bloomberg BNA's Securities Regulation & Law Report: Justices Could Take Middle Ground Over §11 Liability for Opinion Statements


By all indications at oral argument before the U.S. Supreme Court Nov. 3, issuers won't automatically be able to avoid liability under 1933 Securities Act Section 11 for stating their sincerely held opinions or beliefs in a registration statement if those statements ultimately are shown to be false (Omnicare Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund, U.S., No. 13-435, 11/03/14).

In a dispute over statements made by healthcare giant Omnicare Inc. regarding its compliance with legal requirements, the justices appeared skeptical that a statement of opinion or belief is actionable only if the party offering the statement didn't believe that it was true. However, the justices also seemed disinclined to premise liability on the ultimate falsity of an opinion stated by the issuer.

Based on the oral argument, “it seems as if the Court is looking for a middle ground between the parties’ respective positions,” Thad Behrens, Haynes and Boone, LLP, told Bloomberg BNA. Under that approach, statements of opinion could be actionable if either the speaker didn't genuinely believe them or they were made without any reasonable basis,” Behrens said.

He said in e-mail “that even the plaintiffs appeared to agree that state of mind has some relevance to whether an opinion can be actionable under Section 11. The Sixth Circuit's holding that state of mind is entirely irrelevant thus does not seem likely to be upheld.”

Excerpted from Bloomberg BNA's Securities Regulation & Law Report, November 3, 2014. View the full article(subscription required).

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