Annual Review of Federal Securities Regulation: Caselaw Developments 2011

William O. Fisher, University of Richmond


U.S. Supreme Court defines the "makers" of statements liable for violating Rule 10b-5, addresses the relationship between statistical significance and materiality in the life sciences context, and limits what a court need find in order to certify a Rule 23 (b) (3) class in a Rule 10b-5 securities case. In 2011, the U.S. Supreme Court limited the "makers" of statements who can be liable under Rule10b-5 to individuals and entities controlling the statements' content and communication. The Court ruled that statistical significance is not necessary in order that side effects from drugs and medical devices be material. And the Court held that a plaintiff need not demonstrate loss causation in order to obtain certification of a Rule 23(b)(3) class in a Rule 10b-5 private lawsuit. The courts of appeals produced a welter of opinions last year, striking down a controversial Securities and Exchange Commission ("SEC' or "Commission") rule that provided shareholder access to issuers' proxy statements and proxy cards for the purpose of soliciting votes for shareholder-nominated director candidates. Those courts addressed matters ranging from disclosure of one-time accounting benefits from new contracts, to whether an issuer that makes a voluntary disclosure of an event thereby creates an obligation to disclose similar events in the future, to the degree to which closing provisions in deal documents for international transactions affect the application of Rule 10b-5 to the purchases and sales of the securities involved.