The implied private action for violations of SEC Rule 10b-5 has a contentious history. When plaintiffs base such actions on representations of forward-looking information, however, the stakes are even higher. Recently, the federal circuit courts revisited this divisive issue while deciding whether an omission from required disclosure of Management’s Discussion and Analysis (MD&A) of financial conditions and results of operations. The apparent disparity between the federal circuit courts has caused great consternation and uncertainty in the corporate legal sphere.
This Note will examine the origins and controversial history of Rule 10b-5 private actions, discuss the treatment of MD&A omissions throughout the various federal circuits, offer a harmonized reading that resolves the perceived difference between the circuits, and explain how this reading satiates the concerns of both proponents and opponents of increased securities disclosure.