Last March, in the securities class action Matrixx Initiatives v. Siracusano , the U.S. Supreme Court unanimously rejected the defendants’ proposed bright-line “statistically significant” rule for determining whether adverse event reports withheld from a pharmaceutical company’s public filings are material as a matter of law. Instead, the court adhered to the traditional fact-specific inquiry set forth in its 1988 opinion in Basic Inc. v. Levinson , which asks: Would the omitted information have been viewed by a reasonable investor as having significantly altered the “total mix” of information made available in the marketplace?
Acknowledging that the mere existence of adverse event reports does not satisfy the Basic standard, the court held in Matrixx that “something more is needed, but that something more is not limited to statistical significance and can come from the source, content, and context of the reports.”
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