Macquarie Infrastructure Corp. v. Moab Partners, L.P. (22-1165)
argument 22-1165Macquarie Infrastructure Corp. v. Moab Partners, L.P.
Supreme Court of the United States
1h 5m
8 speakers
8 chapters
transcribed 7 days ago
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Transcript
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Transcript generated automatically by AI and may contain errors.
What is the legal basis for requiring a material fact to be disclosed under Rule 10b‑5?
You'll hear argument first this morning in case twenty two eleven sixty five, Macquarie Infrastructure Corporation. versus Moab. Ms. Kobley?
Thank you, Mr Chief Justice, and may it please the court. Like many cases, this case should be resolved by the text, and here the text is in Rule ten B five as adopted by the Congress in the PSLRA. That text makes clear that an omission is actionable in just one circumstance, when the omitted fact is material and necessary to make a statement not misleading. Today you're going to hear arguments for omission liability in a different circumstance, when the omitted fact is material and required to be stated by Item three hundred and three. None of those arguments is rooted in the text. The text doesn't permit eliding the statement requirement by treating the entire management narrative as misleading if one thing is left out.
The PSLRA shows that Congress had something far more specific in mind by the word statement. The text also doesn't permit recasting a claim about what a 10K does or doesn't say as a claim involving a fraudulent scheme or act. Whenever this court has recognized liability under Rule ten B five A or C, the case has involved something more or different than speech alone. And this is all in the context of the judicially implied private right of action, which this court is loath to expand. No circuit, either before or after the PSLRA, has approached ten B five liability in the ways that Moab and the government are seeking here. Now to be clear, no one is seeking immunity. The SEC has extensive powers to penalise an omission that violates Item three hundred and three.
But without the element of a misleading statement, an omission can't be the subject of a private class action. I'm happy to take the Court's questions.
Uh can a uh uh compliance certification statement be made misleading by an omission.
I would say no, Your Honor, for a couple of reasons. So first of all, the government isn't arguing that a compliance statement itself is a misleading statement. The government's argument is that a compliance statement makes the narrative as a whole the misleading statement. As for the compliance certification itself, though, Your Honor, That statement wouldn't be actionable under the Federal Securities Laws because, first of all, it would be a statement of opinion, and secondly to the extent that it is uh relating to an item of future import, it would be protected by the forward looking the bar on claims against forward looking statements by the State of Harbour.
Are there any specific arguments with respect to nine oh six? I think that question was related to nine oh six and the certification there.
There the Moab is making an argument based on nine oh six, Your Honor. I'll note that the Second Circuit did not rely on nine oh six, a nine oh six certification. The nine oh six certification wasn't mentioned in the complaint, in the briefs below, or uh or in the brief in opposition. So we don't think that's the thing. And that
certification is not a part of the three oh three filing, is it?
It is not. It is a separate document from the securities filings themselves. And of course, the requirement for a nine oh six certification does not appear in the securities laws. It appears in the criminal code. And this court is loath to interpret a civil remedy from something in the criminal code unless Congress specifically stated so.
So in this case we don't need to reach that issue. I think that's correct, Your Honor.
Council, and uh the distinction you draw between sort of half truths uh and omissions It strikes me as one that might be hard to apply in practice. Uh let's say you have a statement that, you know, our our sales are going to rise because of the new processors we're going to uh bring online. But what you don't say is that our sales are going to fall because EPA is going to issue new regulations, you know what something like along those lines that you know, and they're going to limit further the use of number six oil. No Is that an omission case because y you know there's a difference between new processors uh increasing sales and EPA regulation uh lowering it, uh or is it a half truth uh uh situation because the first part says our sales will rise?
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Chapters
8 chapters
1
What is the legal basis for requiring a material fact to be disclosed under Rule 10b‑5?
0:00–8:35
2
How does the government argue that an omission can create a misleading statement under Item 303?
8:35–17:47
3
What distinction does the Court draw between a “half‑truth” and a pure omission?
17:47–26:39
4
Why do the parties disagree on whether the entire MD&A can be treated as a single statement?
26:39–35:31
5
How do the Supreme Court justices apply the Cardozo two‑street analogy to securities disclosures?
35:31–43:24
6
What role does the Private Securities Litigation Reform Act’s pleading requirement play in this case?
43:24–51:11
7
How do the parties interpret the interaction between Section 11 and Rule 10b‑5‑B?
51:11–57:51
8
What is the final question before the Court regarding the scope of private rights of action for Item 303 violations?
57:51–1:05:51