Basic Incorporated, et al., Petitioners v. Max L. Levinson et al., 485 U.S. 224

Summary

The Supreme Court granted certiorari to resolve a split among the courts of appeals as to the standard of materiality applicable to premerger discussions and to determine whether the courts properly imposed a presumption of reliance in certifying class members in an action alleging violations of § 10(b) of the Securities and Exchange Act, 15 U.S.C.S. § 78A et seq., and Securities and Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5 (1987). The Court held that an omitted fact was material if a reasonable shareholder would consider it important in making his or her vote and this standard should be applied to all § 10(b) and Rule 10b-5 actions. The Court also held that materiality required a case by case review of the facts and that a rebuttable presumption existed that stockholders relied on available information when buying or selling securities. The judgment of the court of appeals was accordingly reversed and remanded.