The Society has submitted an amicus brief in an important MD&A disclosure case, Macquarie Infrastructure vs. Moab Partners, that is pending before the U.S. Supreme Court.
In the brief, the Society asks the Court to overturn a line of Section 10(b) cases from the U.S. Court of Appeals for the Second Circuit that allowed class-action plaintiffs to bring cases against companies based on industry trends that were not disclosed in corporate MD&A (Item 303) disclosures regardless of materiality or their relation to management’s view of the business.
“These decisions undermine Item 303’s raison d’être by opening the floodgates for private plaintiffs to pursue pure omissions-based federal securities fraud claims under Section 10(b) and Rule 10b-5, simply by second-guessing, with hindsight, management’s disclosure decisions under Item 303,” the Society wrote in its brief. “In so holding, the Second Circuit has upended decades of settled practice, forcing management to prognosticate and draft defensively what were already the most demanding MD&A disclosures.”
Oral arguments in this case are scheduled for January 16, 2024.
The Society would like to thank Pamela Marcogliese and her team at Freshfields Bruckhaus Deringer for drafting this brief.