AND · 15usc78j:materiality
Materiality is an objective total-mix inquiry, distinct from whether a particular plaintiff actually relied. Hui Feng involved deliberately undisclosed commissions; its investor-focused materiality analysis is used here without importing an unrestricted pure-omission theory after Macquarie.
Exact element source
any manipulative or deceptive device or contrivanceSource:
docroot/ir/usc/title15.jsonl#title15_sec78j; Unicode character offsets [907:958] (end exclusive); SHA-256 8ceaded2a57e5b49e22a4766033c8899ebfd730667700a031b8db7f80ea91e32.All variants
| Variant | Description | Merits instance blocks | Distinct cases | Example cases (up to 3 per group) |
|---|---|---|---|---|
| certification/materiality-common-question | 0 Satisfied 0; not satisfied 0; excluded context 1 | 0 | No counted merits examples Excluded context examples: /us/568/0455-01 — Supreme Court of the United States · 2013 — rule-announced/procedural | |
| conflicted-compensation/eb5-commission-rebates | 1 Satisfied 1; not satisfied 0; excluded context 0 | 1 | /f3d/935/0721-01 — United States Court of Appeals for the Ninth Circuit · 2019 — satisfied | |
| merger-negotiations/confidential-urgency | 1 Satisfied 1; not satisfied 0; excluded context 0 | 1 | /f3d/362/1292-01 — United States Court of Appeals for the Eleventh Circuit · 2004 — satisfied | |
| merger-negotiations/specific-price-and-executive-talks | 1 Satisfied 1; not satisfied 0; excluded context 0 | 1 | /f3d/362/1292-01 — United States Court of Appeals for the Eleventh Circuit · 2004 — satisfied |
How courts decided this element
| Case | Element | Holding and scope | Variant | Exact source quotations |
|---|---|---|---|---|
| /f3d/362/1292-01 — United States Court of Appeals for the Eleventh Circuit · 2004 | Importance to a reasonable investor | satisfied Counted merits instance applied / merits basis: proved; count: EZ Communications information; subject: count=EZ Communications information Confidential executive discussions of a $50 price differed from public speculation about a possible sale. Rejection of this alternative argument for affirmance is necessary to restoring the verdict, not an arguendo alternative holding. | merger-negotiations/specific-price-and-executive-talks | Alan Box, EZ’s CEO, and Ginsburg discussed a specific share price, and Ginsburg knew both that Evergreen was interested in acquiring EZ and that EZ was talking to other companies.Source: docroot/ir/caselaw/f3d_362.jsonl#/f3d/362/1292-01; Unicode character offsets [23576:23755] (end exclusive); SHA-256 29bea9766ff2d9f4b65b5e5cff4412d1447ced5c280b39c720b64dc5c3b2f0c0.As for the nonpublic nature of the evidence, the jury heard testimony from Ron Peale, EZ’s CFO, that the talks were confidential.Source: docroot/ir/caselaw/f3d_362.jsonl#/f3d/362/1292-01; Unicode character offsets [24169:24298] (end exclusive); SHA-256 29bea9766ff2d9f4b65b5e5cff4412d1447ced5c280b39c720b64dc5c3b2f0c0.The materiality of an uncertain prospective event “depend[s] at any given time upon a balancing of both the indicated probability that the event will occur and the anticipated magnitude of the event in light of the totality of the company activity.”Source: docroot/ir/caselaw/f3d_362.jsonl#/f3d/362/1292-01; Unicode character offsets [22479:22728] (end exclusive); SHA-256 29bea9766ff2d9f4b65b5e5cff4412d1447ced5c280b39c720b64dc5c3b2f0c0.The insider information in this case meets the materiality standard.Source: docroot/ir/caselaw/f3d_362.jsonl#/f3d/362/1292-01; Unicode character offsets [22214:22282] (end exclusive); SHA-256 29bea9766ff2d9f4b65b5e5cff4412d1447ced5c280b39c720b64dc5c3b2f0c0. |
| /f3d/362/1292-01 — United States Court of Appeals for the Eleventh Circuit · 2004 | Importance to a reasonable investor | satisfied Counted merits instance applied / merits basis: proved; count: Katz Media information; subject: count=Katz Media information Katz information is separately qualified from EZ. The distinct substantial-steps and tender-offer issues under Rule 14e-3 are excluded. | merger-negotiations/confidential-urgency | As to Katz, Ginsburg was clearly privy to information gleaned under a confidentiality agreement.Source: docroot/ir/caselaw/f3d_362.jsonl#/f3d/362/1292-01; Unicode character offsets [24611:24707] (end exclusive); SHA-256 29bea9766ff2d9f4b65b5e5cff4412d1447ced5c280b39c720b64dc5c3b2f0c0.The jury had before it sufficient evidence to conclude that Ginsburg’s June 16 meeting with Olds indicated to Ginsburg that a deal had to happen fast.Source: docroot/ir/caselaw/f3d_362.jsonl#/f3d/362/1292-01; Unicode character offsets [24708:24858] (end exclusive); SHA-256 29bea9766ff2d9f4b65b5e5cff4412d1447ced5c280b39c720b64dc5c3b2f0c0.The jury could reasonably infer that the information was material and nonpublic.Source: docroot/ir/caselaw/f3d_362.jsonl#/f3d/362/1292-01; Unicode character offsets [24859:24939] (end exclusive); SHA-256 29bea9766ff2d9f4b65b5e5cff4412d1447ced5c280b39c720b64dc5c3b2f0c0. |
| /f3d/935/0721-01 — United States Court of Appeals for the Ninth Circuit · 2019 | Importance to a reasonable investor | satisfied Counted merits instance applied / merits basis: law; party: Hui Feng; theory: client commission disclosures; subject: party=Hui Feng; theory=client commission disclosures Materiality was resolved as a matter of law on established undisputed omissions and testimony. This is an SEC case; no private reliance or economic-loss finding is implied. | conflicted-compensation/eb5-commission-rebates | Feng also entered into marketing agreements with regional centers. Through these agreements, he reserved a number of the limited investor "spots" in certain EB-5 projects, which he then promoted on his website and tried to fill within a set time period. If one of Feng's clients made the required capital contribution to one of these regional centers, and if the USCIS approved the investor's I-526 petition, the regional center agreed to pay Feng commissions of $ 15,000 to $ 70,000. Although hundreds of regional centers participate in the EB-5 program, Feng procured investors only for ten centers, all of which agreed to pay commissions. Feng did not disclose to his clients the commissions he received from the regional centers unless they specifically asked about them.Source: docroot/ir/caselaw/f3d_935.jsonl#/f3d/935/0721-01; Unicode character offsets [3455:4230] (end exclusive); SHA-256 b81c8876a5a14d5352088d7f264360b11de8f12772784fec962b58479a41f19b.Here, the record includes statements of individual investors who said that if they had known about Feng's commissions, they would have attempted to negotiate their administrative fees.Source: docroot/ir/caselaw/f3d_935.jsonl#/f3d/935/0721-01; Unicode character offsets [34445:34629] (end exclusive); SHA-256 b81c8876a5a14d5352088d7f264360b11de8f12772784fec962b58479a41f19b.Generally, an omission is material "if there is 'a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the "total mix" of information made available.' "Source: docroot/ir/caselaw/f3d_935.jsonl#/f3d/935/0721-01; Unicode character offsets [34055:34300] (end exclusive); SHA-256 b81c8876a5a14d5352088d7f264360b11de8f12772784fec962b58479a41f19b.We thus agree with the district court that Feng's failure to disclose his conflict of interest was material.Source: docroot/ir/caselaw/f3d_935.jsonl#/f3d/935/0721-01; Unicode character offsets [34987:35095] (end exclusive); SHA-256 b81c8876a5a14d5352088d7f264360b11de8f12772784fec962b58479a41f19b. |
| /us/568/0455-01 — Supreme Court of the United States · 2013 | Importance to a reasonable investor | not_reached Excluded from merits counts rule-announced / proceduralCertification is affirmed without deciding whether the drug statements were material. Allegations of inflation and later decline are context, not findings of economic loss or causation. | certification/materiality-common-question | In its complaint, Connecticut Retirement alleges that Amgen violated § 10(b) and Rule 10b-5 through certain misrepresentations and misleading omissions regarding the safety, efficacy, and marketing of two of its flagship drugs. According to Connecticut Retirement, these misrepresentations and omissions artificially inflated the price of Amgen’s stock at the time Connecticut Retirement and numerous other securities buyers purchased- the stock. When the truth came to light, Connecticut Retirement asserts, Am-gen’s stock price declined, resulting in financial losses to those who purchased the stock at the inflated price. In its answer to Connecticut Retirement’s complaint, Amgen conceded that “[a]t all relevant times, the market for [its] securities,” which are traded on the NASDAQ stock exchange, “was an efficient market”; thus, “the market for Amgen’s securities promptly digested current information regarding Amgen from all publicly available sources and reflected such information in Amgen’s stock price.” Consolidated Amended Class Action Complaint ¶¶ 199-200 in No. CV-07-2536 (CD Cal.); Answer ¶¶199-200.Source: docroot/ir/caselaw/us_568.jsonl#/us/568/0455-01; Unicode character offsets [9022:10143] (end exclusive); SHA-256 783f30433ff15ff24f247eae80001fb18e8448da4e9093fee6531e6584fb8a8b.Because materiality is judged according to an objective standard, the materiality of Amgen’s alleged misrepresentations and omissions is a question common to all members of the class Connecticut Retirement would represent.Source: docroot/ir/caselaw/us_568.jsonl#/us/568/0455-01; Unicode character offsets [2490:2712] (end exclusive); SHA-256 783f30433ff15ff24f247eae80001fb18e8448da4e9093fee6531e6584fb8a8b.While Connecticut Retirement certainly must prove materiality to prevail on the merits, we hold that such proof is not a prerequisite to class certification.Source: docroot/ir/caselaw/us_568.jsonl#/us/568/0455-01; Unicode character offsets [2170:2327] (end exclusive); SHA-256 783f30433ff15ff24f247eae80001fb18e8448da4e9093fee6531e6584fb8a8b. |
Court interpretations
interpretation
Generally, an omission is material "if there is 'a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the "total mix" of information made available.' "
/f3d/935/0721-01 — United States Court of Appeals for the Ninth Circuit · 2019
Generally, an omission is material "if there is 'a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the "total mix" of information made available.' "Source:
docroot/ir/caselaw/f3d_935.jsonl#/f3d/935/0721-01; Unicode character offsets [34055:34300] (end exclusive); SHA-256 b81c8876a5a14d5352088d7f264360b11de8f12772784fec962b58479a41f19b.Materiality is an objective total-mix inquiry, distinct from whether a particular plaintiff actually relied. Hui Feng involved deliberately undisclosed commissions; its investor-focused materiality analysis is used here without importing an unrestricted pure-omission theory after Macquarie.