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A&O Shearman files amicus brief on behalf of Washington Legal Foundation to challenge meritless securities fraud suits based on forward-looking risk disclosures

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Published Date

Sep 4 2024

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On August 16, 2024, partner Lyle Roberts, counsel George Anhang, and associate Billy Marsh filed an amicus brief on behalf of the Washington Legal Foundation (WLF) urging the Supreme Court to reverse a decision of the U.S. Court of Appeals for the Ninth Circuit in Facebook, Inc. v. Amalgamated Bank, which held a public company’s risk disclosures about its future operations can form the basis of a viable securities fraud class action under Rule 10b-5 if they do not also refer to past instances in which the risk has materialized.

The amicus brief argued that prospective risk disclosures are not rendered misleading by the omission of backward-looking information, and constitute forward-looking statements that are not actionable under the PSLRA’s “safe harbor” provision and the “bespeaks caution” doctrine. The amicus brief also explained that the Ninth Circuit’s ruling could force companies to disclose extensive, immaterial information about past incidents to avoid liability, which will harm investors and impose undue burden on public companies, and that the Ninth Circuit’s decision could expose companies to frivolous securities litigation based on accurate, forward-looking risk disclosures.

Oral argument on the matter is currently scheduled to occur before the Supreme Court on November 6, 2024.

The Washington Legal Foundation (WLF) is a nonprofit public-interest law firm and policy center with supporters in the U.S. Founded in 1977, WLF promotes and defends free enterprise, individual rights, limited government and the rule of law.