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Second Circuit Review: Court Addresses Materiality Standard Under Federal Securities Law
March 24, 2011
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Litigation partners Marty Flumenbaum and Brad Karp's Second Circuit Review column appears in the March 23 issue of the New York Law Journal. The article discusses Landmen Partners Inc. v. The Blackstone Group, L.P., in which the Second Circuit adopted a view of materiality that potentially reduces the pleading burden on plaintiffs bringing claims under federal securities laws. The court decreased the pleading obligations in claims under Sections 11 and 12(a)(2) of the Securities Act of 1933, focusing its analysis on the importance of the allegedly misleading statements to a corporate segment, rather than the public entity itself. The court also permitted a claim to be based on corporate and market developments that were publicly known but not specifically described in the registration statement and prospectus at issue. Litigation associate James R. Fleming, Jr. assisted in the preparation of the column.