On Feb. 9, one of the plaintiffs in the federal securities class action against Nvidia Corp., Roberto Cohen, filed a petition for writ of certiorari with the U.S. Supreme Court, seeking review of the U.S. Court of Appeals for the Ninth Circuit’s Oct. 2, 2014, decision affirming dismissal of the action, specifically, the court’s holding that Item 303 of U.S. Securities and Exchange Commission (SEC) Regulation S-K does not create a duty to disclose for purposes of an omission actionable under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. Cohen’s petition (Cohen v. Nvidia, Petition No. 14-975) argues that this holding by the Ninth Circuit in In re Nvidia Securities Litigation, 768 F.3d 1046 (9th Cir. 2014), conflicts with the Second Circuit’s recent holding in Stratte-McClure v. Morgan Stanley, No. 13-0627, 2015 U.S. App. LEXIS 428 (2d Cir. Jan. 12, 2015), and the Third Circuit’s 15-year-old decision in Oran v. Stafford, 226 F.3d 275 (3d Cir. 2000). Although the Ninth Circuit’s opinion states that its holding regarding Item 303 disclosures is consistent, not in conflict, with Oran, a split among these circuits exists nonetheless.

According to Cornerstone Research’s “Securities Class Action Filings: 2014 Year in Review,” since 1997, most federal securities class actions have been filed in these three circuits; indeed, 114 of the 170 new cases brought in 2014 were filed in the Second (52 cases), Ninth (40 cases), and Third circuits (22 cases). With the majority of securities class actions pending in these circuits, the Supreme Court may grant Cohen’s petition in order to resolve this conflict so that public companies will have clear guidance for complying with their disclosure obligations under Item 303.

The Ninth Circuit’s Decision In ‘Nvidia’

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