Below, a continuation of our bibliography of thought-provoking articles on issues related to right-sizing regulation, staying private versus going public, and related topics:
A Framework for Thinking about Leidos
In “Ask Me No Questions and I Will Tell You No Lies: The Insignificance of Leidos Before the United States Supreme Court,” Joseph Grundfest addresses the issues arising in Leidos, Inc. v. Indiana Public Retirement System. The Supreme Court had agreed to hear the case; however, it was settled before it reached the Court. In Leidos, the Court would have considered whether a separate Section 10(b) action may exist as a result of a pure omission (even if the omission does not render any affirmative statement false or misleading) to address Item 303 of Regulation S-K to discuss known trends. The Second Circuit has held that an omission of Item 303 disclosure is actionable under Rule 10b-5, while the Ninth Circuit has taken a contrary view. Grundfest notes that the importance of the case has been overstated as it is of no practical significance as to whether a material pure omission is actionable because it is a pure omission or because it results in a half-truth. More importantly, the paper provides an excellent discussion of Rule 10b-5 liability and the standard under Item 303.