Business Roundtable and the U.S. Chamber of Commerce on February 26, 2019, filed an amicus brief before the U.S. Supreme Court in the case, Emulex Corp. v. Varjabedian, on writ of certiorari to the U.S. Court of Appeals for the Ninth Circuit.
The brief supports the appeal by Emulex in a case presenting important issues for any publicly traded business desiring to engage in mergers or acquisitions.
At issue is whether the Ninth Circuit correctly held, in express disagreement with five other courts of appeal, that Section 14(e) of the Securities Exchange Act of 1934 supports an inferred private right of action based on a negligent misstatement or omission made in connection with a tender offer.
Under the Ninth Circuit’s holding, businesses engaging in mergers will face greater threats of frivolous litigation and have a greater incentive to provide voluminous disclosures that are likely to be confusing and of little value to investors.
The Securities Industry and Financial Markets Association filed an amicus brief arguing that negligence is insufficient to demonstrate liability under Section 14(e). Business Roundtable and the Chamber of Commerce argued that there is no basis to infer a private right of action under Section 14(e) at all.