“Statistically Significant” Standard Suffers an Adverse Event: Matrixx Initiatives, Inc. v. Siracusano

March 23, 2011
In ruling that plaintiffs seeking to assert securities fraud claims against healthcare companies based on the failure to disclose adverse event reports will not be required to allege that the reports were “statistically significant in order to be material.” In Matrixx Initiatives, Inc. v. Siracusano, No. 09-1156, the Supreme Court of the United States eliminated the bright-line “statistical significance” standard employed by the Second Circuit and other federal circuits in favor of a more flexible approach to assessing whether omissions relating to adverse event reports were material and were made with the requisite degree of intent to make out a claim of fraud under the federal securities laws. This update reviews the Court’s decision and suggests possible implications for life sciences and other companies considering disclosure obligations relating to reports of adverse health events.