24
Mar
2015

Lawyers Weigh In On High Court's Omnicare Decision

Law360

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On Tuesday, the Supreme Court reversed and remanded a Sixth Circuit ruling that executives can be held responsible for opinions expressed to investors that later turned out to be false. Here, attorneys tell Law360 why the decision in Omnicare Inc. et al. v. Laborers District Council Construction Industry Pension Fund et al. is significant.

William G. Passannante discusses why the Omnicare decision is significant.

"The Supreme Court's opinion in Omnicare is welcome news for directors and officers. While not an unadulterated victory for the issuer because the case was remanded not dismissed, the court reversed the 6th Circuit's more lenient approach which had found that objectively false statements of opinion can lead to liability, as opposed to requiring that a plaintiff allege that the speakers knew the statement was false. Thus, the court narrowed liability under Section 11 of the Securities Exchange Act. This result may support the general trend in D&O liability insurance toward somewhat more limited liability and downward pressure on premiums."