Avoiding Liability in Public Securities Offerings: The Lesson of Omnicare
On March 24, 2015, the U.S. Supreme Court decided Omnicare v. Laborers District Council Construction Industry Pension Fund, a case with which public companies should be familiar before their next issuance of securities.
Omnicare addresses the circumstances in which companies are liable under Section 11 of the Securities Act of 1933 for statements in registration statements that later prove to be incorrect. The Court held that liability may exist if any of the following are true: (i) a statement of fact is incorrect, (ii) a statement of opinion is not sincerely held, or (iii) a statement of opinion omits accompanying disclosure of material facts supporting the opinion that a reasonable investor would consider important or disclosure that the opinion is tentative.
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