Matrixx Decision Raises More Disclosure Questions – Law Professor
This article was originally published in The Tan Sheet
The Supreme Court's decision in the lawsuit alleging Matrixx Initiatives fraudulently withheld adverse event reports from investors provides little guidance for pharmaceutical and dietary supplement firms on disclosing adverse events, an expert says.
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The Supreme Court's decision in a complaint shareholders brought against Matrixx Initiatives lowers the threshold for when firms need to disclose information, but also aims to prevent an "avalanche of trivial information."
In litigation between Matrixx Initiatives and shareholders, the Supreme Court appears concerned with striking a balance between requiring the disclosure of any facts that could affect investors' decisions and the release of so much information that important facts are obscured.
In light of arguments before the Supreme Court concerning shareholders' complaint against Matrixx Initiatives, securities law attorneys advise firms not to rely on a statistical significance standard for disclosing reports of problems with a product.