The question
Whether a failure to disclose information required by Item 303 of SEC Regulation S-K can support a private claim under SEC Rule 10b-5(b) in the absence of an otherwise misleading statement.
Macquarie Infrastructure Corp. v. Moab Partners, L. P.
What the Court decided
The Court reversed the Second Circuit and held that a pure omission cannot support a private claim under SEC Rule 10b-5(b). Rule 10b-5(b) bars omitting a material fact only when the omission renders statements actually made misleading, so a plaintiff must identify an affirmative statement that the omission made misleading rather than point to silence alone. A failure to disclose information required by Item 303 can support a Rule 10b-5(b) claim only if that omission makes an affirmative statement misleading.
How the justices split
UnanimousThe Court's opinion
Sotomayor, joined by Roberts, Thomas, Alito, Kagan, Gorsuch, Kavanaugh, Barrett, Jackson
Rule 10b-5(b) covers half-truths, not pure omissions, because its text requires identifying affirmative statements made before determining whether other facts are needed to keep those statements from being misleading. A pure omission occurs when a speaker says nothing in circumstances that give no special significance to the silence, while a half-truth states the truth only so far as it goes and omits critical qualifying information. Statutory context confirms this reading, because Section 11(a) of the Securities Act of 1933 expressly creates liability for failure to state a required fact while Section 10(b) and Rule 10b-5(b) contain no similar language. Silence absent a duty to disclose is not misleading under Rule 10b-5, and a failure to disclose information required by Item 303 can support a Rule 10b-5(b) claim only if the omission renders affirmative statements made misleading.
How we know · 5 sourced claims
The Court held that pure omissions are not actionable under Rule 10b-5(b).
Source: syllabus, Held
Rule 10b-5(b) prohibits omitting a material fact necessary to make the statements made not misleading, which the Court read to cover half-truths and not pure omissions.
Source: syllabus, Held
The Court reasoned that Section 11(a) of the Securities Act of 1933 creates liability for failure to speak, while Section 10(b) and Rule 10b-5(b) contain no similar language.
Source: syllabus, Held
A failure to disclose information required by Item 303 can support a Rule 10b-5(b) claim only if the omission renders affirmative statements made misleading.
Source: syllabus, Held
Justice Sotomayor delivered the opinion for a unanimous Court.
Source: syllabus, lineup