The Overused and Under-Defined Notion of 'Material' in Securities Law

Abstract

Core doctrine in federal securities law rests on a single word - "material." Federal statutes and agency anti-fraud rules and disclosure requirements contain the term as an essential qualifier and identifier. "Facts" or "information" must be "material" before a legal obligation to disclose attaches. In other words, the term material has an unrivaled position in the center of all of securities law and agency rules and court decisions applying the term necessarily establish the fundamental scope and bite of securities regulation. A study of close to eight hundred cases in which a federal court’s applies the term to specific facts, however, finds that the case-law is, well, quixotic at best and fickle at worst. An argument on the proper breakdown of the cases is begun here.