Tangent: I Should Note That This Supremes Decision Means A LOT LESS… That Some Will Say It Does: On Securities Law Liability, For “Pure Silence”

There will doubtlessly be some commentators who will say this is a big shift in the federal securities law jurisprudence announced this morning.

It isn’t. [In fact, it is not even worth naming the case. And to be clear, this is a defense Elizabeth Holmes tried to put forward — but she had created affirmative duties to disclose for herself, when speaking to her investors, because she had previously openly lied about so many of these material matters — like whether the device even worked. Smile.]

This new case merely holds that one may remain silent, where no special circumstances require affirmative speaking — speaking, to make the other statements made, not misleading by omitting context.

That’s all it holds. If someone buys a security without any disclosures, from someone else, without asking any questions, and without a disclosure document (in an exempt transaction, for example), there can be no 10b-5(b) liability — due to the failure of the buyers’ diligence.

Unsurprising, and that’s been understood to be the well settled law — for at least four decades. Since I practice M&A in the life sciences, this all comes up pretty often. Now you know. Onward, into the sunshiny Friday air.

Smile.

नमस्ते

SBF Asks To Remain In Rather Harsh Brooklyn MDC — During His Appeals…

Now that we all know he’s been sentenced to a quarter-century… we begin to focus on WHERE he might do that time…

And so, a rather smallish update here — but SBF has filed his appeal of the guilty verdicts, in the Second Circuit today. And with it, he’s asked the able USDC Judge Kaplan to allow him to remain in MDC Brooklyn, to be near his lawyers, as they prepare the appeal papers.

He’ll likely be granted that… grace.

But pretty soon (like mid-2025), he’s going to be headed to a Low Security federal prison to do his full bid. That will likely be nearer Central California, and with his parents in Palo Alto — the nearest suitable federal facility is probably FCI Mendota, not too far inland from Fresno.

But if that one is overly crowded, and Nevada doesn’t want him, he might end up on Terminal Island, with Sunny Balwani — down in the Port of Los Angeles.

I expect the living will be easier at either of those California facilities, than the relatively harsh Brooklyn one where he is now.

But at the MDC in Brooklyn, he’s likely figured out how to trade Mac for things he needs — like haircuts, snacks and instant coffee — when he runs short, from the canteen.

We shall see — but he will be a very gray old man, when he finally gets out now.

There is essentially zero chance he wins on appeal — same with Sunny Balwani, and Elizabeth Holmes, in fact.

Now you know. Onward.

Update: There May Be No Live Argument In The Ninth Cir.: Notice On Docket.

I’ve long said there are no remotely meritorious claims in Ms. Holmes’ appeal of her conviction. Same, Sunny Balwani’s.

Now the Ninth Circuit hints at much the same — suggesting while it might hear argument on June 10, it may also simply decide the appeal on the briefs alone. That is common in busy districts where no novel or particularly weighty issues are raised on an appeal, in a criminal case — like this one, despite the wall-to-wall, copious and generally very capable press coverage of the trials, and the aftermaths — as to both felons:

…NOTE: Although your case is currently scheduled for oral argument, the panel may decide to submit the case on the briefs instead. See Fed. R. App. P. 34. Absent further order of the court, if the court does determine that oral argument is required in this case, you are expected to appear in person at the Courthouse. If an in person appearance would pose a hardship, you must file a motion for permission to appear remotely by video, using the CM/ECF filing event “Motion for any relief (other than reconsideration or to seal)” and selecting the appropriate relief. Such a motion must be filed within 7 days of this notice, absent exigent circumstances. Everyone appearing in person must review and comply with our Protocols for In Person Hearings, available here. If the panel determines that it will hold oral argument in your case, the Clerk’s Office will contact you directly at least two weeks before the set argument date to review any requirements for in person appearance or to make any necessary arrangements for a remote appearance that has been approved or directed by the panel.

Please note however that if you do file a motion to appear remotely, the court strongly prefers video over telephone appearance. Therefore, if you wish to appear remotely by telephone you will need to justify that request in your motion and receive explicit permission to do so….

Now you know.