This month, we discuss Landmen Partners Inc. v. The Blackstone Group, L.P.,1 in which the U.S. Court of Appeals for the Second Circuit adopted a view of materiality that potentially reduces the pleading burden on plaintiffs bringing claims under the Securities Act of 1933. The opinion, written by Senior Circuit Judge Chester A. Straub and joined by Judges José A. Cabranes and Roger J. Miner, focused on the significance of misleading statements to certain segments of an issuer’s business, rather than to the whole of the issuer’s business. The court also permitted the claims to proceed based on corporate and market developments that were publicly known but not specifically described in the registration statement and prospectus at issue.
Background and History
Blackstone is a large financial advisory firm and alternative asset manager with approximately $88.4 billion in assets under management as of May 1, 2007. In June 2007, Blackstone offered stock in an IPO and raised more than $4.5 billion. The following April, investors in the IPO sued Blackstone, alleging that it made material omissions and misstatements in its registration statement and prospectus in connection with the IPO, in violation of Sections 11 and 12(a)(2) of the Securities Act.
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