With valuable support from the institutional investor community, an amicus curiae brief was filed on October 1, 2024, with the United States Supreme Court in Facebook, Inc., et al. v. Amalgamated Bank, et al.  The "friend of the court" brief is supported by prominent pension funds and other institutional investors from across the United States, as well as the National Conference on Public Employee Retirement Systems (NCPERS), which collectively represent more than $5 trillion of assets invested on behalf of retirees, employees, and other investors.  The institutional investors’ amicus brief explains why the Supreme Court should reject Facebook’s attempt to craft a stark exception to the well-established prohibition against telling misleading half-truths in “risk factor disclosures” contained within securities filings.  

The Securities and Exchange Commission requires public companies like Facebook to provide a frank discussion of the material factors that make an investment in the company speculative or risky.  Courts around the country are in broad agreement that risk factor statements can be false and misleading when the risks framed as “hypothetical” future risks are, in fact, present risks that have already transpired but for which the harm has not yet materialized.  Facebook has petitioned the Supreme Court for a brightline rule that would allow companies to conceal presently existing material risks to a company simply by couching the risk as a “hypothetical” future one that could occur in the future.  

Investors have a vital interest in safeguarding their investments when companies that disclose risk factors opt to mislead investors about the most significant threats a company faces— risks framed only as hypothetical possibilities when, in reality, they have already happened, but the harm from them has not yet been realized.  This esteemed group of institutional investors urges the Supreme Court to apply well-established securities law principles and logic and affirm the underlying Ninth Circuit opinion sustaining at the pleading stage the material falsity of Facebook’s risk factor disclosures.

Available here, the brief was prepared by experienced appellate counsel in consultation with attorneys from Labaton Keller Sucharow.  The Supreme Court is scheduled to hear argument in the Facebook case on November 6, 2024.