TheCorporateCounsel.net

Just earlier this month, John was recounting the recent oral argument before the Supreme Court in the case of Facebook, Inc. v. Amalgamated Bank, which addresses the potential liability in the hypothetical risk factor scenario that we have all been grappling with as securities lawyers for a number of years. As John noted, some of the conservative justices seemed skeptical of the arguments that hypothetical risk factor disclosure was misleading, with at least one justice noting that the SEC could write a rule to address this type of disclosure, rather than forcing the judiciary to “walk the plank.” Don’t even get us started…

While we all might have hoped for some clarity around this issue through an authoritative Supreme Court opinion, no such clarity is meant to be, because the Supreme Court pulled an Emily Litella last week and issued an order stating: “Nevermind!” This BCLP alert notes:

The Court on November 22 issued an order in Facebook, Inc. v. Amalgamated Bank, No. 23-980, stating that the “writ of certiorari is dismissed as improvidently granted.” That’s the language the Court uses when it accepts a case for consideration and then changes its mind about deciding the case.

As a result, the Supreme Court leaves standing the Ninth Circuit’s decision that allowed the plaintiffs to proceed with their complaint based on allegedly misleading hypothetical cybersecurity and data privacy risk factor disclosure that did not address the Cambridge Analytica scandal.

For now, in the absence of any further clarity, companies should continue to be vigilant about these disclosures, given the potential risks from an SEC enforcement and private securities litigation perspective.

– Dave Lynn