Oral Argument: Macquarie Infrastructure Corp. v. Moab Partners, L.P. | Case No. 22-1165 | Date Argued: 1/16/24 | Date Decided: 4/12/24

Oral Argument: Macquarie Infrastructure Corp. v. Moab Partners, L.P. | Case No. 22-1165 | Date Argued: 1/16/24 | Date Decided: 4/12/24

Link to Docket: Here.

Background:

Section l0(b) of the Securities Exchange Act of 1934 prohibits deception in connection with the purchase or sale of securities. To that end, SEC Rule l0b-5 declares it unlawful to make an untrue statement or omit a material fact "necessary" to make an affirmative statement "not misleading." 17 C.F.R. § 240.10b-5(b). A violation of this requirement can give rise to a private claim-a judicially implied private right of action that this Court has construed narrowly. Item 303 of SEC Regulation S-K calls for additional disclosures under a different standard. Item 303 is an administrative rule that requires a company to disclose known trends or uncertainties that are likely to have a material impact on its financial position, regardless of whether the company had made any statements that would otherwise be misleading.

Question Presented: Whether the Second Circuit erred in holding-in conflict with the Third, Ninth, and Eleventh Circuits-that a failure to make a disclosure required under Item 303 can support a private claim under Section l0(b), even in the absence of an otherwise-misleading statement.

Holding: Pure omissions are not actionable under SEC Rule 10b-5(b), which makes it unlawful to omit material facts in connection with buying or selling securities when that omission renders "statements made" misleading.

Result: Vacated and remanded.

Voting Breakdown: 9-0. Justice Sotomayor delivered the opinion for a unanimous Court.

Link to Opinion: Here.

Oral Advocates:

• For Petitioner: Linda T. Coberly, Chicago, Ill.
• For Respondent Moab Partners, L.P.: David C. Frederick, Washington, D.C.; and Ephraim McDowell, Assistant to the Solicitor General, Department of Justice, Washington, D.C. (for United States, as Amicus Curiae.)

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