Three significant securities law decisions highlight the new Supreme Court session, which will be the first complete term for Justice Neil Gorsuch. These cases, two of which involve Bay Area companies, concern the liability of public companies in private lawsuits for failing to comply with the disclosure requirements of the Securities and Exchange Commission (SEC); whether plaintiffs may bring class action lawsuits in state courts alleging false and misleading statements in registration statements for public offerings, or whether such actions may be filed only in federal court; and whether corporate whistleblowers must have reported to the SEC, rather than just internally, in order to file lawsuits in federal court alleging that they were victims of retaliation.

Leidos v. Indiana Public Retirement System

This case, scheduled for oral argument on Nov. 6, concerns the SEC's requirement that the annual and other reports of public companies provide information as instructed by the SEC's Regulation S-K. Item 303 of Regulation S-K requires annual reports to include Management's Discussion and Analysis of Financial Condition and Results of Operation (MD&A). The MD&A, among other things, directs companies to describe “any known trends or uncertainties” that have had or that the company reasonably expects to have a materially favorable or unfavorable impact on sales, revenue or income from continuing operations. A disclosure duty arises when “a trend, demand, commitment, event or uncertainty” is both reasonably known to management and reasonably likely to significantly affect the company's financial condition or results of operations.