Subjective Falsity Under Section 11 of the Securities Act: Protecting Statements of Opinion

Subjective Falsity Under Section 11 of the Securities Act: Protecting Statements of Opinion discusses the Sixth Circuit’s strict liability decision in Indiana State District Council of Laborers & Hod Carriers Pension & Welfare Fund v. Omnicare, Inc. for statements of opinion contained in registration statements, and its express departure from both the Second and Ninth Circuits. Consistent with the Second, Third, and Ninth Circuits, this Article proposes that both objective and subjective falsity should be the requisite pleading standard for section 11 opinion statement cases. This Article reaches this conclusion by examining the history of the Securities Act and section 11, pleading requirements, decisions of other circuits, current legal scholarship, and recently-implemented statutes and regulations. Additionally, this Article examines the detrimental effects that a strict liability holding will have on highly-regulated industries such as healthcare and finance. This case is currently pending before the Supreme Court, sub nom. Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, distributed for conference of February 21, 2014.