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ARTICLE · 24 AUGUST 2023

Merit, Or No Merit? That Is The (Disclosure) Question

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The U.S. District Court for the District of Massachusetts recently denied a motion to dismiss securities fraud claims in The City of Fort Lauderdale Police and Firefighters' Retirement System...

CanadaCorporate/Commercial Law
Erica R. S. Goldman
Erica R. S. Goldman
Mile T. Kurta
Mile T. Kurta
Andrew Beck
Andrew Beck
Chris Bornhorst
Chris Bornhorst
Andrew Gray
Andrew Gray
Glen Johnson
Glen Johnson
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The U.S. District Court for the District of Massachusetts recently denied a motion to dismiss securities fraud claims in The City of Fort Lauderdale Police and Firefighters' Retirement System v. Pegasystems Inc.1. The putative class action lawsuit accused Pegasystems of failing to properly disclose whether an earlier-filed lawsuit against the company had "merit". The Court held Pegasystems indeed misled investors in its U.S. Securities and Exchange Commission (SEC) disclosures.

What you need to know

  • The motion to dismiss was denied because statements in SEC filings describing litigation as "without merit" can be "false and misleading" under U.S. federal securities law, if the issuer is aware of viable legal arguments against it.

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