Professor Ronald J. Colombo joined other corporate and securities law professors in an amicus brief to the U.S. Supreme Court in Leidos, Inc., v. Indiana Public Retirement System, Indiana State Teachers’ Retirement Fund, And Indiana Public Employees’ Retirement Fund, No. 16-581 (U.S. 2017).
The issue is whether Item 303 of Regulation S-K (MD&A) creates a duty to disclose for purposes of Rule 10b-5(b).
The amicus brief argues that it does; that if there is no duty to disclose, private investors will have no recourse, at least under Rule 10b-5(b), for nondisclosure of information required in periodic reports.
The amici also argue that this will impact Securities and Exchange Commission enforcement since the duty to disclose element applies to the SEC as well.
Language similar to what’s in Rule 10b-5(b) is also in Section 17(a)(2) and 12(a)(2) of the 1933 Securities Act, so the implications may go well beyond Rule 10b-5(b).