Lower Courts Ignore Supreme Court’s Test for Materiality

Law360, New York (August 25, 2006, 12:00 AM EDT) -- If you ask the wrong question, you’ll get the wrong answer. That is the situation in which some lower courts have found themselves as they dismiss securities claims on the grounds that an allegedly false statement is “too vague” to be material to investors.

Unfortunately, these lower courts are not applying the test for materiality set forth by the Supreme Court in 1976 and repeatedly affirmed throughout the last three decades. By failing to ask the right questions to determine materiality, they are dismissing cases for...
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