Supreme Court of the United States

Omnicare, Inc., Petitioners v. Laborers District Council Construction Industrypension Fund

March 24, 2015575 U.S. 175

Summary

The Supreme Court held that a sincere statement of pure opinion in a securities registration statement is not an 'untrue statement of material fact' under Section 11 of the Securities Act, even if the opinion later proves wrong. However, an opinion statement can be misleading under Section 11's omissions clause when the issuer omits material facts about its inquiry into or knowledge concerning the basis for the opinion, such that a reasonable investor would take from the statement a foundation the issuer did not have. The Court vacated the Sixth Circuit's judgment, which had applied the wrong standard by treating objective falsity as sufficient for liability on either theory, and remanded for the lower courts to evaluate the Funds' omissions claim under the correct framework. Justice Scalia concurred only in part and in the judgment, and Justice Thomas concurred in the judgment.

Holding

  • Whether a sincere but ultimately incorrect statement of pure opinion constitutes an 'untrue statement of a material fact' under Section 11's first clause. A sincere statement of pure opinion is not an 'untrue statement of material fact,' regardless whether an investor can ultimately prove the belief wrong; liability under the false-statement provision attaches only if the speaker did not actually hold the professed belief or if the statement contains embedded factual assertions (about the speaker's state of mind or supporting facts) that are untrue.
  • Whether the omission of facts can render a sincere statement of opinion misleading under Section 11's omissions clause. An opinion statement may be rendered misleading by omission when the registration statement omits material facts about the issuer's inquiry into or knowledge concerning the opinion, and those omitted facts conflict with what a reasonable investor would take from the statement—i.e., where the omission shows the issuer lacked the basis for the opinion that a reasonable investor would expect. An opinion is not misleading merely because external facts show it incorrect, nor necessarily misleading when the issuer fails to disclose some contrary fact, since reasonable investors understand opinions rest on weighing competing facts; context matters, including hedges, disclaimers, and qualifications.

Docket 13-435

Cited authorities

  • 48 Stat. 74

Cited by

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