Share on linkedin The U.S. Supreme Court on Friday ruled that shareholders can't sue companies under federal fraud law for not disclosing information about future risks — unless the omission makes another statement misleading.SCOTUS threw companies a big bone in an age of increasing discourse over what they should disclose beyond traditional financials.
A ruling the other way could have amped up the concerns of company execs about the SEC's climate disclosure rules — currently on pause — which leave it up to companies to determine what information is material, and thus should be disclosed.in a lawsuit filed by Moab Partners back in 2018. Moab sued Macquarie for not disclosing that its revenue was vulnerable to a phase-out of high-sulfur freighter fuel between 2016 and 2018.
SCOTUS reversed an earlier decision by the New York-based 2nd U.S. Circuit Court of Appeals to allow Moab's class action suit to proceed.— which requires companies to disclose "known trends or uncertainties that have had or that are reasonably likely to have a material favorable or unfavorable impact" in their regulatory filings — can amount to violating the anti-fraud provisions of the 1934 Securities and Exchange Act., and that it would create even more confusion for investors.