Blackstone Group LP, et al. v. Litwin, et al.

NCLC urged the U.S. Supreme Court to grant review of this case and to hold that securities plaintiffs must show that a misstatement or the omission of a fact significantly affected expectations about returns of the issuer’s overall business portfolio. In this case, a group of investors sued Blackstone under sections 11 and 12 of the Securities Act of 1933, claiming the company failed to disclose in their IPO certain risks associated with its real estate investments, which accounted for only 0.4% of Blackstone’s assets at the time. The plaintiffs argue they need only allege that a misstatement or omitted fact was “significant” to a quantitatively small segment of the issuer’s financial portfolio (in this case, a mere 0.4% at the time). The “materiality” pleading standard adopted by the Second Circuit would dramatically increase securities issuers’ exposure to unfounded class action lawsuits and, as a result, discourage investment in U.S. public capital markets.

The Supreme Court denied certiorari.

Amicus brief in support of certiorari filed 8/1/11. Cert. denied 10/3/11.