We recently reported that among the securities cases on the U.S. Supreme Court’s docket was Matrixx Initiatives Inc. v. Siracusano, which addressed the sufficiency of a securities fraud complaint premised on a drug company’s failure to disclose adverse incident reports concerning a drug, but which did not allege a “statistically significant” number of such incidents.1 On March 22, 2011, the Supreme Court unanimously affirmed the U.S. Court of Appeals for the Ninth Circuit, holding that the complaint was sufficient and rejecting a bright-line materiality standard based upon statistical significance.
The opinion, written by Justice Sonia Sotomayor, not only eliminates an argument that drug companies had used successfully in the U.S. Court of Appeals for the Second Circuit, but reaffirms that materiality is dependent upon whether the fact omitted or misrepresented significantly altered the total mix of available information from the perspective of the reasonable investor.
The ‘Matrixx’ Case
