Morrow Ni successfully dismisses Federal Securities Act suit, S.D.N.Y. Rules For The First Time In The 90-Year History of The Securities Act That The Law Does Not Permit "Implied" Registration

The Southern District of New York today dismissed a securities lawsuit filed by a plaintiff hedge fund against our listed company client. In this case, the plaintiff argued that "vague" or "ambiguous" language in the securities registration statement could "imply" an intent to register and thus result in registration, regardless of the issuer's actual intent. After a year and a half of litigation, the Court granted our motion to dismiss the complaint in full, ruling for the first time in the 90 years since the enactment of the Securities Act of 1933 that "ambiguous" language in a registration statement cannot result in registration as a matter of law. Instead, the court held that securities law principles, statutory provisions, SEC rules, and the policies underlying the law all support the legal ruling that securities registration must be clearly, unequivocally, and unambiguously stated on the first page of the registration statement, and the intent to register can only be effectuated by following Schedule A of the Securities Act to the letter to make the proper disclosures, as well as paying the appropriate fees under SEC Rule 230.457. This ruling provides necessary and timely guidance for the capital markets, particularly in the SPAC setting, clarifying a long-standing uncertainty in the SPAC market concerning warrant exercise registration.