Today, the U.S. Supreme Court issued its anticipated Omnicare decision, which addresses the standard of liability applied to expressions of opinion in a registration statement for a public offering. While there will be clamoring about Omnicare (it is somewhat rare for the Supreme Court to issue securities law decisions), in my opinion the case does not involve a fundamental shift in how disclosure is drafted, although it does invite a few drafting and diligence strategies.

Statutory Backdrop

Section 11 of the Securities Act of 1933 permits purchasers of securities to sue for damages if a registration statement, at the time it became effective:

  • contained an untrue statement of a material fact; or
  • omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

In contrast with other types of securities liability, neither the untrue statements prong nor the omissions prong of Section 11 requires showing that a defendant acted with any intent to deceive or defraud.

Omnicare’s Opinions

Omnicare, the nation’s largest provider of pharmacy services for residents of nursing homes, filed a registration statement for a public offering of its common stock. In discussing the effects of various laws on its business model, including its acceptance of rebates from pharmaceutical manufacturers, the registration statement contained the following statements of opinion:

  • “We believe our contract arrangements with other healthcare providers, our pharmaceutical suppliers and our pharmacy practices are in compliance with applicable federal and state laws.”
  • “We believe that our contracts with pharmaceutical manufacturers are legally and economically valid arrangements that bring value to the healthcare system and the patients that we serve.”

Continue Reading IMHO, Omnicare Doesn’t Materially Change Opinion Disclosure

A_Ledbetter_LR.jpgCONTRIBUTED BY
Andrew Ledbetter
andrew.ledbetter@dlapiper.com

The Facebook IPO is a pretty big deal generally. Whether Facebook would go public stirred media frenzy and Congressional testimony in the past year. Facebook’s initial registration statement indicated it would be the largest tech company IPO ever (the fee table on the original filing showed a $5 billion offering – the filing fee alone was $573k).  And the company’s social importance is undeniable.

But what will the SEC staff think about Facebook’s disclosures? Will the path to going public hit some speed bumps? We got our first big clue on Wednesday, when after the markets closed Facebook filed its first substantive amendment to the Form S-1 for its IPO. (It filed Amendment No. 1 shortly after its original filing, solely to add exhibits.)

On interesting deals, I sometimes compare an amended S-1 to the prior filing to see what changed. Seeing what disclosures a company has changed lets me surmise whether SEC comments may have driven the change and piece together the issues the SEC staff has raised with the filing. In a deal like Facebook’s, you can assume the staff heavily, carefully reviewed the filing, so the comments the staff elected to give may reveal points of general SEC emphasis, with potential application to other companies. A deal like this also tends to become a frequently used source for future disclosures by other companies looking for precedents, which makes monitoring Facebook’s disclosures particularly interesting. 

Or perhaps that’s just my rationalization – I just couldn’t help but spend a few hours looking at this…

In any event, for kindred spirits, my guess is that Facebook probably received SEC comments clustered around the themes discussed below. For those who do not routinely review registration statements, this post will be fairly technical and you may want to stop reading now.Continue Reading Like? Comment? What the SEC might think of Facebook’s IPO

Megan Muir.jpgCONTRIBUTED BY
Megan Muir

As reported in The Seattle Times, Bothell-based HaloSource recently completed its initial public offering of shares on the London AIM stock exchange.  HaloSource plans to use the proceeds to pay down existing debt and to accelerate growth.  A few large shareholders also obtained some liquidity as they sold shares in the offering.  Because the company’s shares have not been registered in the United States, the AIM exchange filings are not generally available here.  In its prospectus, the company anticipates substantial (40%) growth in 2010 versus 2009 sales.Continue Reading Not-So-Local Local IPO