In a unanimous decision, the US Supreme Court held that pure omissions are not actionable under Rule 10b-5(b) under the Securities Exchange Act of 1934. Rather, the Court found that Rule 10b–5(b) prohibits half-truths, not pure omissions, because the rule requires identifying affirmative assertions (i.e., “statements made”) before determining if other facts are needed to make those statements not misleading.
The decision resolves a circuit split concerning the circumstances in which shareholders can bring private suits under Rule 10b-5(b) for a company’s failure to make required disclosures in the management’s discussion and analysis, or MD&A, section of its periodic reports filed with the SEC.
