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
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