NOTE 

UPDATING THE DUTY TO UPDATE: 

HARMONIZING A CONTINUOUS DUTY 

WITH A PERIODIC DISCLOSURE REGIME 

Sarah Pyun 

      For decades, courts have struggled to determine whether 

and when public companies are obligated to update prior 

disclosures that, although true when made, become misleading 

as a result of a subsequent event. Prior to 2020, a lack of 

urgency coupled with an increasingly periodic disclosure 

regime furthered obscured the role and relevance of this 

dubious obligation, otherwise known as the duty to update. 

However, with the paradigmatic subsequent event of COVID-

19 still permeating through every aspect of life nearly two years 

after its onset, the duty to update—and all of its 

uncertainties—has come into the fore once again.   

      This Note suggests three recommendations to the duty to 

update in light of its renewed relevance. First, the framework 

for identifying a statement subject to the duty should be 

streamlined. Second, courts should adopt a consistent 

materiality test when evaluating potential violations of the 

duty. Finally, and most importantly, the SEC should utilize its 

rulemaking power to clarify its calls for more continuous 

disclosures in the wake of the pandemic. Only then will the 

duty to update claim its appropriate role in the grand scheme 

of securities regulation.   
 

I. Introduction ............................................................... 1031 

 

J.D. Candidate 2022, Columbia Law School; B.A. 2016, Wellesley 

College. My sincerest gratitude to Professor Katharina Pistor for her insight 

and guidance, the members of the Columbia Business Law Review editorial 

staff for their tireless work preparing this piece for publication, and my 

family and friends for their unwavering love and support. 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1031 

II. The Purpose and Current State of the United States’ 

Disclosure Regime ..................................................... 1034 
A. Disclosure’s History and Purpose ...................... 1034 
B. The Duty To Disclose .......................................... 1038 

1. Mandatory Disclosures ................................. 1039 
2. Implied Duty To Disclose .............................. 1043 

C. Duties To Correct and Update ........................... 1046 
1. Duty To Correct ............................................. 1048 
2. Duty To Update ............................................. 1052 
3. Potential Defenses ......................................... 1053 

III. Approaches To the Duty To Update ......................... 1056 
A. Recognition of the Duty To Update ................... 1056 

1. Statements Remaining “Alive” ..................... 1061 
2. Statements Representing a Fundamental 

Change............................................................ 1065 
B. Rejection of the Duty To Update ....................... 1066 
C. The Ninth Circuit Tackles the Duties To Correct 

and Update .......................................................... 1068 
IV. Reviving the Duty To Update ................................... 1072 
V. Conclusion .................................................................. 1082 
 

I. INTRODUCTION 

      In the current climate of economic uncertainty propelled 

by the ongoing global pandemic, regulatory guidance carries 

heightened importance for public companies seeking to 

comply with federal securities laws, rules, and regulations. 

However well-intentioned this guidance might be, significant 

issues may arise in practice when the legal bases for certain 

recommendations are unclear to both courts and litigants. 

One area in which such issues may emerge is liability based 

on a public company’s purported duty to update prior 

disclosures that, although true when made, become 

misleading because of a subsequent event.1 

 

1 See ANN C. KIM ET AL., SEC ENFORCEMENT AND LITIGATION RISKS 

AMID THE COVID-19 PANDEMIC 2–4 (Apr. 22, 2020) (on file with the 

Columbia Business Law Review), 



  

1032 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

      The Securities and Exchange Commission (SEC) invoked 

an idea similar to this duty on March 25, 2020, when its 

Division of Corporation Finance (CF Division) released its 

first major guidance on corporate disclosures and other 

securities law obligations related to the COVID-19 pandemic.2 

Among its recommendations was a non-exhaustive list of 

questions companies should consider when assessing and 

disclosing the impact of COVID-19 and related risks on their 

present and future operations.3 Specifically, the CF Division 

“encourage[d] companies to provide disclosures that allow 

investors to evaluate the current and expected impact of 

COVID-19 through the eyes of management, and [to] 

proactively revise and update disclosures as facts and 

circumstances change.”4 The CF Division further suggested 

that companies should, in order to refrain from trading prior 

to the dissemination of material non-public information, 

“consider whether [they] may need to revisit, refresh, or 

update previous disclosure to the extent that the information 

becomes materially inaccurate.”5 

      While nothing in the CF Division’s guidance has legal 

force,6 the emphasis on updating disclosures raises two 

questions: whether companies have a duty to update and, if 

so, when this duty arises. Initial reactions to the guidance 

have suggested that it may increase the potential for civil 

claims based on the duty to update, and, thus, some have 

recommended that companies should be cautious about 

providing more robust forward-looking statements about 

COVID-19’s impact.7 Unfortunately for interested parties, the 

guidance remains unclear. A duty to update is not expressly 
 

https://www.hoganlovells.com/~/media/hogan-lovells/pdf/2020-

pdfs/2020_04_22_sec_covid_19_enforcement_litigation_article.pdf. 
2 Div. of Corp. Fin., SEC, CF Disclosure Guidance: Topic No. 9, U.S. 

SEC. & EXCH. COMM’N (Mar. 25, 2020), 

https://www.sec.gov/corpfin/coronavirus-covid-19 [https://perma.cc/YGN4-

ACSD]. 
3 Id. 
4 Id.   
5 See id. (noting also the risks of improper selective disclosure). 
6 Id. 
7 See, e.g., KIM ET AL., supra note 1, at 4. 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1033 

codified by any securities law.8 Instead, the contours of the 

duty, to the extent that it is recognized, have developed in 

courtrooms, and the courts’ inconsistent treatment of the duty 

to update has resulted in confusing and contradictory 

standards.9 

      This Note argues that the duty to update still has a place 

in securities regulation, not only in protecting investors when 

making their personal investment decisions but also in 

promoting the efficiency of our capital markets more broadly. 

Part II discusses the purpose and current state of the United 

States disclosure regime, including the duty to disclose in 

general and the closely related, and oft-confused, duties to 

correct and update. Part III discusses the positions various 

circuit courts have taken on the duty to update and the 

muddiness they have created. 

      Part IV demonstrates why the debate surrounding the 

duty to update has been revived by the global pandemic. It 

then argues that courts should still impose the duty to update 

in certain circumstances, contrary to the decades-long trend 

of limiting the duty as a byproduct of confusing judicial 

development. In order to fill its proper role in the disclosure 

regime while also eliminating frivolous or unsubstantiated 

claims, the duty to update analysis needs three adjustments. 

First, the framework for identifying an original statement 

subject to the duty should be streamlined. Second, courts 

should take a two-step approach to assess materiality in duty 

to update cases: both the original statement and the newly-

discovered information should be material for the duty to 

arise. Finally, the SEC must create a regulatory scheme that 

addresses whether and when issuers should update prior 

disclosures rendered materially misleading by subsequent 

events. These adjustments align with the purpose of 

 

8 Jeffrey A. Brill, Note, The Status of the Duty to Update, 7 CORNELL 

J.L. & PUB. POL’Y 605, 608 (1998). 
9 See 3C HAROLD S. BLOOMENTHAL & SAMUEL WOLFF, SECURITIES 

AND FEDERAL CORPORATE LAW § 18:23, Westlaw (database updated Mar. 

2021) (“It would be an understatement of major proportions to say that the 

federal courts are not in agreement as to whether federal securities law 

imposes a ‘duty to update.’”). 



  

1034 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

disclosure-based securities regulation and provide a readily 

available set of procedures for both courts and litigants alike.   

II. THE PURPOSE AND CURRENT STATE OF THE 
UNITED STATES’ DISCLOSURE REGIME 

      Any discussion of the duty to update and the potential 

impact of COVID-19 upon it must be understood through the 

lens of the United States’ disclosure regime, which has been 

the bedrock of securities regulation since the New Deal. This 

Part clarifies when disclosure is mandatory, when it is 

required because of an implied duty to disclose, and how the 

duties to correct and update are distinct. 

A. Disclosure’s History and Purpose 

      Congress undertook a sweeping overhaul of securities 

regulation following “rampant abuses in the securities 

industry [that] led to the 1929 stock market crash and the 

Great Depression.”10 A critical factor Congress “perceived” to 

have caused these abuses was a “lack of information” in the 

investing community.11 In an attempt to remedy this problem, 

Congress enacted two principal regulatory safeguards: the 

Securities Act of 193312 (Securities Act) and the Securities 

Exchange Act of 193413 (Exchange Act).14 Congress’s purpose 

 

10 See Kokesh v. SEC, 137 S. Ct. 1635, 1639–40 (2017). 
11 See Daniel C. Rowe, Periodic Reporting in a Continuous World: 

The Correlating Evolution of Technology and Financial Reporting, 13 DUKE 

L. & TECH. REV. 248, 249 (2015). 
12 Securities Act of 1933 (Securities Act), Pub. L. No. 73-22, 48 Stat. 

74 (codified as amended at 15 U.S.C. §§ 77a–77mm (2018)). 
13 Securities Exchange Act of 1934 (Exchange Act), Pub. L. No. 73-

291, 48 Stat. 881 (codified as amended at 15 U.S.C. §§ 78a–78qq). 
14 See, e.g., Nathan Lee, The Extraterritorial Reach of United States 

Securities Actions After Morrison v. National Australian Bank, 13 RICH. J. 

GLOB. L. & BUS. 623, 623 (2015) (“In the aftermath of Black Tuesday, the 

infamous Wall Street crash of 1929, Congress enacted the Securities Act of 

1933 and the Securities Exchange Act of 1934. These two Acts sought to 

ensure legitimacy in the securities market by, among other things, 

regulating and preventing deceptive conduct in securities transactions.” 

(footnote omitted)). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1035 

in enacting these statutes was to “promote investor 

confidence” in the securities markets15 by “substitut[ing] a 

philosophy of full disclosure for the philosophy of caveat 

emptor.”16 Congress recognized that “the hiding and secreting 

of important information obstructs the operation of the 

markets as indices of real value.”17 

      In general terms, the Securities Act regulates the initial 

distribution of securities, and the Exchange Act regulates 

secondary trading.18 The Securities Act registration system 

specifies mandatory disclosure documents—namely the 

prospectus and registration statement—when offering 

securities.19 “Registration is intended to provide such 

disclosure of material facts concerning the company and the 

securities it proposes to sell, to enable investors to make a 

realistic appraisal of the merits of the securities and then 

exercise informed judgment in determining whether to 

purchase them.”20 Registration requires, in general, “a 

description of the company’s properties and business; a 

description of the security to be offered for sale; information 

 

15 SEC v. Zandford, 535 U.S. 813, 819 (2002) (internal quotation 

marks omitted) (quoting United States v. O’Hagan, 521 U.S. 642, 658 

(1997)). 
16 Kokesh v. SEC, 137 S. Ct. 1635, 1640 n.1 (2017) (alteration in 

original) (internal quotation marks omitted) (quoting SEC v. Cap. Gains 

Rsch. Bureau, Inc., 375 U.S. 180, 186 (1963)). 
17 Basic Inc. v. Levinson, 485 U.S. 224, 246 (1988) (internal 

quotation marks omitted) (quoting H.R. REP. NO. 73-1383, at 11 (1934)). 
18 See Cent. Bank of Denver v. First Interstate Bank of Denver, 511 

U.S. 164, 171 (1994) (citing Blue Chip Stamps v. Manor Drug Stores, 421 

U.S. 723, 752 (1975)). 
19 15 U.S.C. § 77e (2018); see also Blue Chip Stamps, 421 U.S. at 

728 (“The 1933 Act was described as an Act ‘to provide full and fair 

disclosure of the character of securities sold in interstate and foreign 

commerce and through the mails, and to prevent frauds in the sale thereof, 

and for other purposes.’” (quoting Securities Act of 1933, Pub. L. No. 73-22, 

48 Stat. 74, 74)). 
20 Shelby D. Green, To Disclose or Not To Disclose? That Is the 

Question for the Corporate Fiduciary Who Is Also a Pension Plan Fiduciary 

Under ERISA: Resolving the Conflict of Duty, 9 U. PA. J. LAB. & EMP. L. 831, 

834 (2007). 



  

1036 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

about the management of the company; and financial 

statements certified by independent accountants.”21 

      The Exchange Act “was described as an Act ‘to provide for 

the regulation of securities exchanges and of over-the-counter 

markets operating in interstate and foreign commerce and 

through the mails, to prevent inequitable and unfair practices 

on such exchanges and markets, and for other purposes.’”22 

The Exchange Act also created the SEC,23 the most important 

player in the development of the United States’ disclosure 

regime. From its inception, the SEC has touted investor 

protection as one of its foundational principles.24 To 

implement this principle, the SEC possesses the authority to 

require the disclosure of information that allows investors to 

make informed investment and voting decisions.25 “Such 

information makes it possible for investors to evaluate 

companies and have the confidence to invest and, as a result, 

allows[s] [the country’s] capital markets to flourish.”26 

 

21 The Laws That Govern the Securities Industry, U.S. SEC. & EXCH. 

COMM’N (bullet points omitted), https://www.sec.gov/answers/about-

lawsshtml.html [https://perma.cc/EF97-E3XL] (last modified Oct. 1, 2013). 
22 Blue Chip Stamps, 421 U.S. at 728 (quoting Securities Exchange 

Act of 1934 (Exchange Act), Pub. L. No. 73-291, 48 Stat. 881, 881). 
23 Exchange Act § 4(a). 
24 What We Do, U.S. SEC. & EXCH. COMM’N, 

https://www.sec.gov/about/what-we-do [https://perma.cc/FGZ9-74Q7] (last 

modified Dec. 18, 2020). In addition to investor protection, the SEC’s other 

primary concerns when engaging in rulemaking in the public interest are 

the promotion of “efficiency, competition, and capital formation.” 15 U.S.C. 

§ 77b(b) (2018). 
25 Mary Jo White, Chair, U.S. Sec. & Exch. Comm’n, The Path 

Forward on Disclosure (Oct. 15, 2013), 

https://www.sec.gov/news/speech/spch101513mjw [https://perma.cc/E98Z-

3YKH] (“[O]ne of the most meaningful powers that [the SEC has] to wield 

on behalf of investors is [its] authority to require companies to tell investors 

about the things that matter to them. . . . Without proper disclosure, 

investors would be unable to make informed decisions.”). 
26 Id.; cf. also SEC v. Tex. Gulf Sulphur Co., 401 F.2d 833, 858 (2d 

Cir. 1968) (en banc) (“The dominant congressional purposes underlying the 

Securities Exchange Act of 1934 were to promote free and open public 

securities markets and to protect the investing public from suffering 

inequities in trading, including, specifically, inequities that follow from 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1037 

      By enacting the Securities Act and the Exchange Act, and 

by granting the SEC broad authority to regulate the securities 

industry,27 Congress created an integral scheme to provide 

investors with various types of protections.28 By increasing 

investor confidence in the marketplace, proper disclosure 

fosters growth and innovation29 and increases share price 

accuracy, which reduces risks and boosts market 

efficiency.30 Thus, the disclosure regime benefits not only 

investors but also issuers and the public at large.31 This is 

particularly true during and after times of crisis, for when 

markets become unreliable or more illiquid “the cost of capital 

increases, and, in theory, investment decreases,” harming all 

 

trading that has been stimulated by the publication of false or misleading 

corporate information releases.”). 
27 See The Laws That Govern the Securities Industry, supra note 21. 
28 Elisabeth Keller & Gregory A. Gehlmann, Introductory 

Comment, A Historical Introduction to the Securities Act of 1933 and the 

Securities Exchange Act of 1934, 49 OHIO ST. L.J. 329, 329–30 (1988). Within 

the same decade, Congress enacted several other statutes to bolster this 

nascent regulatory regime. See id. at 329, 330 & nn.7–10 (discussing the 

Public Utilities Holding Company Act of 1935, the Trust Indenture Act of 

1939, the Investment Company Act of 1940, and the Investment Advisers 

Act of 1940). 
29 Hillary A. Sale & Robert B. Thompson, Market Intermediation, 

Publicness, and Securities Class Actions, 93 WASH. U. L. REV. 487, 530 

(2015). 
30 See Merritt B. Fox, Why Civil Liability for Disclosure Violations 

When Issuers Do Not Trade?, 2009 WIS. L. REV. 297, 312 (2009); cf. also 

White, supra note 25 (“Without proper disclosure, investors . . . . would not 

know about the financial condition of the company they are investing in. Nor 

would they know about how the company operates, who its board members 

are or what business, operational or financial risks the company faces, let 

alone may face in the future.”). On the other hand, there are arguments 

against an expansive disclosure regime. See, e.g., Edmund W. Kitch, The 

Theory and Practice of Securities Disclosure, 61 BROOK L. REV. 763, 856 

(1995) (observing that “innovation and risk-taking would occur less 

frequently” under a disclosure regime requiring firms to disclose all “the 

thoughts and plans” of management). 
31 Hillary A. Sale, Disclosure’s Purpose, 107 GEO. L.J. 1045, 1046 

(2019). 



  

1038 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

three groups.32 As will be argued later, the duty to update 

should account for this trickle-down effect. 

B. The Duty To Disclose 

      In crafting the first major federal securities laws, 

“Congress . . . attempt[ed] to thread the needle and devise a 

regulatory regime that would . . . protect investors without 

impeding corporate access to the capital markets.”33 The 

result of this balancing act was a disclosure-based regime.34 

Public issuers are now subject to a variety of disclosure 

obligations through which the buying and selling of securities 

are regulated.35 While mandatory disclosure obligations are 

grounded in the statutory framework of the Securities Act and 

the Exchange Act, courts have elaborated the circumstances 

in which a duty to disclose can and should be imposed.36 

      In general, “the SEC requires that the information 

provided” in accordance with the securities laws “be accurate, 

[but] it does not guarantee it.”37 Further, its “disclosure 

regime does not prevent risky products from being sold.”38 

“[T]he traditional rule of . . . disclosure has long been that 

corporations have no general duty to disclose information 

simply because that information is material.”39 Without a duty 

to disclose, liability for non-disclosure, including any violation 

 

32 See id. at 1051 (footnote omitted) (drawing on the example of “the 

2008-2009 financial crisis”). Presumably, disclosure is also important in the 

face of today’s pandemic-related challenges.   
33 Ronald J. Colombo, Merit Regulation via the Suitability Rules, 12 

J. INT’L BUS. & L. 1, 3–4 (2013). 
34 Id. at 5. 
35 See J. Robert Brown, Jr., Corporate Communications and the 

Federal Securities Laws, 53 GEO. WASH. L. REV. 741, 741–46 (1985) 

(summarizing disclosure regulation). 
36 See, e.g., TSC Indus. v. Northway, Inc., 426 U.S. 438, 449 (1976) 

(defining the threshold of “materiality” determining when disclosure must 

be made). 
37 The Laws That Govern the Securities Industry, supra note 21. 
38 Sale, supra note 31, at 1048. 
39 Gregory S. Porter, What Did You Know and When Did You Know 

It?: Public Company Disclosure and the Mythical Duties To Correct and 

Update, 68 FORDHAM L. REV. 2199, 2199–2200 (2000). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1039 

of a purported duty to update, cannot be found.40 And, as one 

commentator has noted, “the main reason for truncating 

disclosure duties” is to further “the interest of encouraging 

production and innovation.”41 After a brief overview of the 

United States’ mandatory disclosure requirements, this 

Section will discuss when an implied duty to disclose arises.   

1. Mandatory Disclosures 

      Through the Securities Act, Congress established a system 

of full disclosure42 over one of merit regulation43 based on the 

conclusion that “[s]unlight is said to be the best of 

disinfectants.”44 Full disclosure provides investors with an 

opportunity to evaluate the merits of an investment and fend 

for themselves, thereby satisfying the purposes of merit-based 

 

40 Cf. Chiarella v. United States, 445 U.S. 222, 235 (1980) (“When 

an allegation of fraud is based upon nondisclosure, there can be no fraud 

absent a duty to speak.”). 
41 Donald C. Langevoort, Disasters and Disclosures: Securities 

Fraud Liability in the Shadow of a Corporate Catastrophe, 107 GEO. L.J. 

967, 975 (2019). 
42 See Basic Inc. v. Levinson, 485 U.S. 224, 234 (1988) (“Disclosure, 

and not paternalistic withholding of accurate information, is the policy 

chosen and expressed by Congress. We have recognized time and again, a 

‘fundamental purpose’ of the various Securities Acts, ‘was to substitute a 

philosophy of full disclosure for the philosophy of caveat emptor and thus to 

achieve a high standard of business ethics in the securities industry.” 

(quoting SEC v. Cap. Gains Rsch. Bureau, Inc., 375 U.S. 180, 186 (1963))). 
43 Colombo, supra note 33, at 6–7 (defining merit regulation as a 

government official determining whether the quality of a given security is 

adequate for sale).   
44 Roberta S. Karmel, Disclosure Reform—the SEC Is Riding Off in 

Two Directions at Once, 71 BUS. LAW. 781, 784 (2016) (internal quotation 

marks omitted) (quoting LOUIS D. BRANDEIS, OTHER PEOPLE’S MONEY AND 

HOW THE BANKERS USE IT 92 (Frederick A. Stokes Co. 1914)). “In other 

words, enhanced disclosure would lead to better securities industry 

practices, by making unsavory practices more difficult to conceal or get 

away with.” Colombo, supra note 33, at 3 (citing Susanna Kim Ripken, The 
Dangers and Drawbacks of the Disclosure Antidote: Toward a More 

Substantive Approach to Securities Regulation, 58 BAYLOR L. REV. 139, 151 

(2006)). 



  

1040 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

regulation.45 Thus, a specified list of disclosure items was 

attached to the Securities Act as Schedule A.46 The statute 

also created opportunities for both government and regulatory 

enforcement, as well as for private suits by investors.47 

Broadly, the Securities Act has been regarded as a successful 

balancing mechanism between the interests of investors and 

the general public, and the desire to maintain free and 

efficient markets.48 

      Shortly after this initial legislation, Congress enacted the 

Exchange Act,49 which built upon the disclosure requirements 

established by the Securities Act.50 The scope of the Securities 

Act, which focused on distributions of securities, paled in 

 

45 See 1 THOMAS LEE HAZEN, TREATISE ON THE LAW OF SECURITIES 

REGULATION § 1:17, Westlaw (database updated Dec. 2020) (“It is a basic 

tenet of federal securities regulation that investors’ ability to make their 

own evaluations of available investments obviates any need that some 

observers may perceive for the costlier and time-consuming governmental 

merit analysis of the securities being offered.”). 
46 Securities Act of 1933, Pub. L. No. 73-22, sched. A, 48 Stat. 74, 

88–91 (codified as amended at 15 U.S.C. § 77aa (2018)). “Schedule A 

provides only a bare-bones outline of the types of disclosures which are 

required” in a registration statement. 1 HAZEN, supra note 45, § 3:8. 

Detailed disclosure requirements appear in the SEC’s registration forms 

and in Regulation S–K. See, e.g., Regulation S-K, 17 C.F.R. §§ 229.10–.1305 

(2020). 
47 The Securities Act contains a number of private remedies for 

investors who are injured due to violations of the Act. See, e.g., 15 U.S.C. §§ 

77k(a), 77l(a)(1)–(2). The Act also contains general antifraud provisions, 

enforceable by the government, which bar material omissions and 

misrepresentations in connection with the offer or sale of securities. Id. § 

77q(a). 
48 Cf. Paul G. Mahoney, The Political Economy of the Securities Act 

of 1933, 30 J. LEGAL STUD. 1, 31 (2001) (“The Securities Act accordingly 

provides a useful cautionary tale about the efficacy of economic regulation. 

The act is generally regarded as one of the greatest success stories of the 

New Deal. Unlike many regulatory statutes, it has been largely untouched 

by claims that it raises entry barriers or enforces cartel agreements among 

members of the regulated industry. Yet . . . in light of the competitive 

conditions in the underwriting market in the 1920s, . . . even the Securities 

Act was a likely source of rents for [regulated] firms.”). 
49 Securities Exchange Act of 1934 (Exchange Act), Pub. L. No. 73-

291, 48 Stat. 881 (codified as amended at 15 U.S.C. §§ 78a–78qq). 
50 See 2 HAZEN, supra note 45, § 9:2. 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1041 

comparison to that of the Exchange Act, which addressed 

“virtually all aspects of securities transactions and the 

securities” industry.51 The Exchange Act set forth a system of 

periodic disclosure,52 imposing registration and reporting 

requirements upon issuers of certain securities,53 as well 

securities dealers and other market professionals,54 national 

securities exchanges,55 and self-regulatory organizations, 

such as the Financial Industry Regulatory Authority.56 

Critically, the Exchange Act created the SEC and provided the 

statutory basis for the SEC’s rulemaking, adjudicatory, and 

enforcement powers.57 For example, section 10(b) of the 

Exchange Act delegates to the SEC responsibility for 

promulgating rules to determine the scope of anti-fraud 

liability.58 

 

51 Id. 
52 Section 13 of the Exchange Act authorizes the SEC to establish 

requirements for periodic reporting of information by companies with 

publicly traded securities. It provides, in pertinent part, that securities 

issuers “shall file with the Commission . . . such annual reports . . . as the 

Commission may prescribe.” 15 U.S.C. § 78m(a)(2). The SEC has 

implemented section 13 through regulations providing that issuers “shall 

file” annual reports on prescribed forms. 17 C.F.R. § 240.13a-1 (2020). 
53 This includes, for example, a company that has more than $10 

million in total assets and a class of equity securities, like common stock, 

that is held of record by either (1) 2,000 or more persons or (2) 500 or more 

persons who are not accredited investors, or that lists its securities on a U.S. 

exchange. See 15 U.S.C. § 78l(b), (g). 
54 Id. §§ 78o, 78o-1 (regulating brokers, dealers, and certain 

issuers). 
55 Id. §§ 78f, 78q, 78s. 
56 Id. § 78o-3. 
57 For the current provisions, see, for example, id. § 78d (SEC 

organization); id. § 78j(b) (SEC rulemaking authority with respect to fraud); 

id. § 78o(b)(1) (SEC adjudication authority with respect to broker-dealer 

registration); id. § 78u (SEC enforcement authority); see also 1 HAZEN, 

supra note 45, § 1:30 (“Much of the [SEC]’s legislative or rule-making power 

derives from certain sections of the securities laws . . . specifically 

empower[ing] the SEC to promulgate rules that have the force of statutory 

provisions.”). 
58 15 U.S.C. § 78j(b). For a discussion of SEC rules-based and 

principles-based SEC rulemaking, see generally James J. Park, The 

Competing Paradigms of Securities Regulation, 57 DUKE L.J. 625 (2007).   



  

1042 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

      By 1982, the SEC had adopted Regulation S-K,59 “which 

served as the basis for coordinating disclosure under both the 

Securities Act . . . and the Exchange Act . . . by having the 

requirements for each incorporate by reference questions set 

out in a single regulation.”60 Today, while some duplication 

issues remain, integrated disclosure has made great strides in 

easing the disclosure burden.61 

      The intricacies of Regulation S-K and related rules are 

numerous, but the concept of materiality continues to be the 

dividing line between what information must be disclosed and 

what information may be withheld.62 Although “[m]ateriality 

 

59 Adoption of Integrated Disclosure System, Securities Act Release 

No. 6383, Exchange Act Release No. 18,524, Investment Company Act 

Release No. 12,264, 47 Fed. Reg. 11,380 (Mar. 16, 1982) (codified as 

amended in scattered parts of 17 C.F.R.). “While many of the disclosure 

requirements currently in Regulation S-K originated in Schedule A, the 

SEC has amended Regulation S-K numerous times since its adoption.” 

Business and Financial Disclosure Required by Regulation S-K, Securities 

Act Release No. 10,064, Exchange Act Release No. 77,599, 81 Fed. Reg. 

23,916, 23,919 (Apr. 22, 2016). 
60 Merritt B. Fox, Civil Liability and Mandatory Disclosure, 109 

COLUM. L. REV. 237, 243 n.11 (2009) (citing 17 C.F.R. § 229 (2008)). The SEC 

explained that its goal in adopting the integrated system was “to revise or 

eliminate overlapping or unnecessary disclosure and dissemination 

requirements wherever possible, thereby reducing burdens on registrants 

while at the same time ensuring that security holders, investors and the 

marketplace have been provided with meaningful, nonduplicative 

information upon which to base investment decisions.” Adoption of 

Integrated Disclosure System, 47 Fed. Reg. at 11,382. 
61 See 1 HAZEN, supra note 45, § 3:11. But see Karmel, supra note 

44, at 787 (“Regulations S-K and S-X primarily embody the SEC’s disclosure 

regime, but disclosure policies are also scattered throughout SEC forms, 

interpretative releases, no-action letters, and comment letters on SEC 

filings; and the courts have articulated them in a variety of securities 

cases.”). 
62 See, e.g., Press Release, U.S. Sec. & Exch. Comm’n, SEC Adopts 

Rule Amendments To Modernize Disclosures of Business, Legal 

Proceedings, and Risk Factors Under Regulation S-K (Aug. 26, 2020), 

https://www.sec.gov/news/press-release/2020-192 [https://perma.cc/T75L-

UNDB] (explaining amendments to Regulation S-K “rooted in materiality” 

(internal quotation marks omitted)); see also 1 HAZEN, supra note 45, § 3:10 

(“[T]he hallmark of disclosure for both the 1933 Act registration statement 

and all 1934 Act filings is embodied in the concept of ‘materiality[.]’”). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1043 

is highly factual and thus defies a bright-line definition,”63 

attempts to define it have been codified in SEC rules: “[t]he 

term ‘material,’ when used to qualify a requirement for the 

furnishing of information as to any subject, limits the 

information required to those matters to which there is a 

substantial likelihood that a reasonable investor would attach 

importance in determining whether to buy or sell the 

securities registered.”64 Courts have also played a major role 

in defining materiality, beginning with the Supreme Court’s 

adoption of an objective standard requiring a showing of “a 

substantial likelihood that the disclosure of [an] omitted fact 

would have been viewed by [a] reasonable investor as having 

significantly altered the ‘total mix’ of information made 

available.”65 Moreover, the courts have decided where 

disclosure of material information is required by an implied 

duty to disclose outside of the statutory framework. 

2. Implied Duty To Disclose 

      Disclosure is mandatory when it is “‘expressly pursuant to 

an independent statute or regulation’—i.e.[,] an affirmative 

legal disclosure obligation,”66 but absent an affirmative 

disclosure obligation, there is no duty to disclose information 

simply because it is material.67 The basis for courts’ imposition 

of a duty to disclose material information beyond affirmative 

requirements largely has been rooted in the antifraud 

provisions of the securities laws—specifically section 10(b) of 

 

63 1 HAZEN, supra note 45, § 3:10. 
64 17 C.F.R. § 240.12b–2 (2020); see also id. § 230.405 (similar). 
65 TSC Indus. v. Northway, Inc., 426 U.S. 438, 449 (1976). 
66 In re Sanofi-Aventis Sec. Litig., 774 F. Supp. 2d 549, 561 

(S.D.N.Y. 2011) (quoting Thesling v. Bioenvision, Inc., 374 F. App’x 141, 143 

(2d Cir. 2010)). 
67 Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 44–45 (2011). 



  

1044 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

the Exchange Act68 and the SEC’s Rule 10b-5, promulgated 

thereunder.69 

      As a threshold matter, the Supreme Court has made it 

abundantly clear that the antifraud provisions themselves do 

not create an affirmative disclosure obligation.70 “Disclosure 

is required under these provisions only when necessary ‘to 

make . . . statements made, in the light of the circumstances 

 

68 15 U.S.C. § 78j(b) (2018) (“It shall be unlawful for any person, . . . 

[t]o use or employ, in connection with the purchase or sale of any security 

registered on a national securities exchange or any security not so 

registered, or any securities-based swap agreement any manipulative or 

deceptive device or contrivance in contravention of such rules and 

regulations as the [SEC] may prescribe as necessary or appropriate in the 

public interest or for the protection of investors.”). “Section 10 (b) was 

designed as a catchall clause to prevent fraudulent practices.” Chiarella v. 

United States, 445 U.S. 222, 226 (1980) (citing Ernst & Ernst v. Hochfelder, 

425 U.S. 185, 202, 206 (1976)). For a discussion of how “[l]iability under 

Section 10(b) differs from that under the . . . Securities Act’s Sections 11 and 

12,” see Matthew C. Turk & Karen E. Woody, The Leidos Mixup and the 

Misunderstood Duty To Disclose in Securities Law, 75 WASH. & LEE L. REV. 

957, 971–72 (2018). 
69 17 C.F.R. § 240.10b-5(a) (“It shall be unlawful for any person, 

directly or indirectly, by the use of any means or instrumentality of 

interstate commerce, or of the mails or of any facility of any national 

securities exchange, (a) [t]o employ any device, scheme, or artifice to 

defraud[.]”). The SEC adopted Rule 10b–5 in 1942 pursuant to section 10(b) 

of the Exchange Act. See Hochfelder, 425 U.S. at 195 (“In 1942, acting 

pursuant to the power conferred by § 10(b), the Commission promulgated 

Rule 10b-5[.]”). 

In a typical § 10(b) private action, a plaintiff must prove (1) a material 

misrepresentation or omission by the defendant; (2) scienter; (3) a 

connection between the misrepresentation or omission and the purchase or 

sale of a security; (4) reliance upon the misrepresentation or omission; (5) 

economic loss; and (6) loss causation. 

Stoneridge Inv. Partners v. Scientific-Atlanta, Inc., 552 U.S. 148, 157 

(2008) (citing Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 341–42 (2005)). 

A full discussion of the elements that plaintiffs must prove to state a claim 

for securities fraud under Rule 10b-5, and of the pleading requirements 

under the federal securities laws and the Federal Rules of Civil Procedure, 

is beyond the scope of this Note. 
70 See Matrixx, 563 U.S. at 44 (“[Section] 10(b) and Rule 10b-5 do 

not create an affirmative duty to disclose any and all material 

information.”). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1045 

under which they were made, not misleading.[‘]”71 Thus, the 

predicate for a disclosure violation is that a company had a 

duty to disclose information—existing at the time of the 

omission or arising subsequently as a result of later events—

but fraudulently withheld it.72 Even if a reasonable investor 

might consider information to be material, “companies can 

control what they have to disclose under these provisions by 

controlling what they say to the market.”73 

      Within this framework, particularly since the 1980s, 

courts have crafted the disclosure duty.74 “There must . . . be 

a duty to speak[, but also,] . . . . once [an] issuer speaks, it 

must tell both the literal truth and the whole truth, including 

any hidden facts necessary to make what is said not 

misleading.”75 Thus, a frequent example of a breach of the 

duty to disclose is when a defendant speaks a “half-truth,” 

withholding information such that the defendant’s disclosure 

is materially misleading.76 The court will impose “a duty to 

 

71 Id. (quoting 17 CFR § 240.10b–5(b) (2010)). 
72 See, e.g., Chiarella, 445 U.S. at 230 (1980) (holding that silence 

is fraudulent only if there is a duty to disclose); Basic Inc. v. Levinson, 485 

U.S. 224, 239 n.17 (1988) (“To be actionable, of course, a statement must . . . 

be misleading. Silence, absent a duty to disclose, is not misleading under 

Rule 10b-5.”); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 

1431–32 (3d Cir. 1997) (holding that a duty to disclose may arise as a result 

of events subsequent to a statement). 
73 Matrixx, 563 U.S. at 45; see also Langevoort, supra note 41, at 

976 (“There is no liability simply because investors would consider [a] secret 

important and would like to know it.”). 
74 See Donald C. Langevoort & G. Mitu Gulati, The Muddled Duty 

To Disclose Under Rule 10b-5, 57 VAND. L. REV. 1639, 1641–42 (2004). 

Because the law of duty formed haphazardly, there is no overarching theory, 

leading to a “muddled” body of precedent. See id. at 1641–43. 
75 Langevoort, supra note 41, at 976. 
76 See, e.g., Ansin v. River Oaks Furniture, Inc., 105 F.3d 745, 752–

54 (1st Cir. 1997) (finding that failing to disclose fully, when repurchasing 

shares from some shareholders, the company’s IPO plans was a material 

omission). For a comprehensive review of the half-truth doctrine, see 

generally Donald C. Langevoort, Half-Truths: Protecting Mistaken 

Inferences by Investors and Others, 52 STAN L. REV. 87 (1999). 



  

1046 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

make [the disclosure] complete and accurate”—a duty that 

remains “whether the disclosure be voluntary or required.”77 

      To plead a disclosure violation under section 10(b), a 

plaintiff often “identif[ies] a specific statement made by the 

company and then explain[s] either (1) how the statement was 

materially misleading or (2) how it omitted a fact that made 

the statement materially misleading.”78 Certain other 

methods for pleading such violations, however, have been 

premised upon two related but distinct duties—the duty to 

correct and the duty to update.79 

C. Duties To Correct and Update 

      Even in the absence of an affirmative duty to disclose, 

“there may be a continuing duty to update [or] correct” 

information previously disseminated.80 Though neither 

section 10(b) nor Rule 10b-5 expressly states that issuers have 

a duty to correct or to update, the language and legislative 

history of both are “broad enough to support the imposition” 

of each.81 The duty to update arises when an earlier statement 

was true when made but subsequent events have rendered 

that statement materially misleading. In contrast, the duty to 

correct arises when a party makes a false statement, without 

knowledge that the statement is false, and later learns of the 

falsity. Both duties assume that a prior statement continues 

 

77 In re Marsh & Mclennan Cos. Sec. Litig., 501 F. Supp. 2d 452, 

469 (S.D.N.Y. 2006) (internal quotation marks omitted) (quoting Glazer v. 

Formica Corp., 964 F.2d 149, 156 (2d Cir. 1992)); Meyer v. JinkoSolar 

Holdings, 761 F.3d 245, 250 (2d Cir. 2014) (“Even when there is no existing 

independent duty to disclose information, once a company speaks on an 

issue or topic, there is a duty to tell the whole truth.” (citing Caiola v. 

Citibank, N.A., 295 F.3d 312, 331 (2d Cir. 2002)). 
78 In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1430 (3d 

Cir. 1997) (citing Stransky v. Cummins Engine Co., 51 F.3d 1329, 1331 (7th 

Cir. 1995)). 
79 See id. 
80 JAMES D. COX & THOMAS LEE HAZEN, BUSINESS ORGANIZATIONS 

LAW § 12.11, at 354 (5th ed. 2020). 
81 See Robert H. Rosenblum, An Issuer’s Duty Under Rule 10b-5 To 

Correct and Update Materially Misleading Statements, 40 CATH. U. L. REV. 

289, 306–08 (1991). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1047 

to influence investor behavior.82 “If a court is persuaded that 

the earlier [statement] is stale”—perhaps because 

“subsequent information [has reached] the plaintiff”—”there 

is no basis to believe” the earlier statement is harming 

investors and, therefore, “there is no basis for either a duty to 

update or [to] correct.”83 

      Due to their close relation, courts and, as a result, 

litigants, have conflated these duties.84 Commentators have 

long recognized the difficulty in distinguishing the two 

duties.85 However, the basic distinction is simple—it turns on 

whether the material statement at issue was misleading, 

incomplete, or factually false when made.86 If the material 

statement was misleading, incomplete, or factually incorrect 

 

82 COX & HAZEN, supra note 80, § 12.11, at 354. 
83 Id. 
84 See, e.g., Burlington, 114 F.3d at 1430 (explaining that 

“[a]lthough plaintiffs characterize[d] their claim as a ‘duty to correct’ claim, 

they appear[ed] to be asserting both a duty to correct and a duty to update”); 

Stransky, 51 F.3d 1329, 1336 (understanding that plaintiff had difficulty 

differentiating between the duty to update and the duty to correct “because 

of the confused state of the law in the area”).   
85 See, e.g., Kimberly D. Krawiec & Kathryn Zeiler, Common-Law 

Disclosure Duties and the Sin of Omission: Testing the Meta-Theories, 91 

VA. L. REV. 1795, 1807 n.29 (2005) (“We coded the duty to update and the 

duty to correct together, rather than separately, due to the difficulty of 

distinguishing one from the other, particularly in cases where the court did 

not distinguish between the two or confused the two issues.”); Brill, supra 

note 8, at 615 (“[I]t is important to note that the courts, the SEC, scholars, 

and litigants have often used the verbs ‘correct’ and ‘update,’ and therefore, 

the legal phrases ‘duty to correct’ and ‘duty to update,’ interchangeably. The 

problem is that the words . . . have similar meanings in common parlance 

that can overlap.” (footnote omitted)). 
86 See 3C BLOOMENTHAL & WOLFF, supra note 9, § 18:23 n.1; Bruce 

Mendelsohn & Jesse Brush, The Duties To Correct and Update: A Web of 

Conflicting Case Law and Principles, 43 SEC. REGUL. L.J. 67, 68 (2015) (“[I]t 

is important to understand the distinction between . . . duties [to correct and 

to update] because they carry different obligations and liability risks and 

involve somewhat different legal considerations: a duty to correct may apply 

if the disclosure was materially false at the time it was made, and a duty to 

update may be triggered if the disclosure became materially false as a result 

of new developments.” (first citing Stransky, 51 F.3d at 1331–33; and then 

citing Backman v. Polaroid Corp., 910 F.2d 10, 16–18 (1st Cir. 1990) (en 

banc)). 



  

1048 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

when made, then a duty to correct may arise. If, instead, the 

material statement was reasonable when made but later 

becomes misleading, then a duty to update may arise.87 

1. Duty To Correct 

      Unlike the law surrounding the duty to update, the law 

surrounding the duty to correct is relatively well settled.88 As 

discussed, Rule 10b–5 prohibits silence as to a material fact 

only if knowing the fact was “necessary in order to make the 

statements made”89 not materially misleading.90 If subsequent 

events reveal that an issuer’s statement of material fact was 

not true when made, a court may impose a duty to correct that 

statement.91 Simply put, the duty to correct may only apply to 

a statement that was incorrect when made.92 The information 

that warrants correction is typically “hard” information, or 

information that is “objectively verifiable and subject to 

disclosure if material to the relevant transaction.”93 “Soft” 
 

87 These definitions draw from the several circuit court decisions. 

As the Third Circuit has explained, “[t]he duty to correct exists ‘when a 

company makes a historical statement that, at the time made, the company 

believed to be true, but as revealed by subsequently discovered information 

actually was not.’” Oran v. Stafford, 226 F.3d 275, 286 (3d Cir. 2000) 

(quoting Burlington, 114 F.3d at 1431). By contrast, the duty to update 

“concerns statements that, although reasonable at the time made, become 

misleading when viewed in the context of subsequent events.” Id. (internal 

quotation marks omitted) (quoting Burlington, 114 F.3d at 1431). 
88 See Backman, 910 F.2d at 16–17 (“Obviously, if a disclosure is in 

fact misleading when made, and the speaker thereafter learns of this, there 

is a duty to correct it.”). 
89 17 C.F.R. § 240.10b-5(b) (2020). 
90 Supra Section II.B.2. 
91 See, e.g., In re Int’l Bus. Machs. Corp. Sec. Litig., 163 F.3d 102, 

109 (2d Cir. 1998); Burlington, 114 F.3d at 1430–1431 (first citing Stransky, 

51 F.3d at 1331–32; and then citing Backman, 910 F.2d at 16–17). 
92 Gallagher v. Abbott Lab’ys, 269 F.3d 806, 810 (7th Cir. 2001) 

(“[A] statement may be ‘corrected’ only if it was incorrect when made[.]”). 
93 See Garcia v. Cordova, 930 F.2d 826, 830 (10th Cir. 1991) 

(citation omitted) (citing Bruce A. Hiler, The SEC and the Courts’ Approach 

to Disclosure of Earnings Projections, Asset Appraisals, and Other Soft 

Information: Old Problems, Changing Views, 46 MD. L. REV. 1114, 1116–17 

(1987)) (distinguishing hard and soft information and explaining the 

scrutiny applied to soft information). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1049 

information, on the other hand, “involves some subjectiv[ity] 

. . . as [in] projections, estimates, opinions, motives, or 

intentions.”94 

      “Backman v. Polaroid Corporation was one of the first 

circuit cases to differentiate . . . the duty to correct [from the] 

duty to update.”95 The court explained that “if a disclosure is 

in fact misleading when made, and the speaker thereafter 

learns of this, there is a duty to correct it.”96 The court then 

distinguished the duty to update, which arises when “a prior 

disclosure ‘becomes materially misleading in light of 

subsequent events.’”97 However, because the defendant’s 

statement at issue “was precisely correct, initially” and 

“remained precisely correct thereafter,” it did not reach the 

question of whether a duty to update or correct existed.98 

“[T]here was nothing to correct or update.”99 

      Various circuits have since adopted similar distinctions 

between the duties to correct and to update.100 

Straightforward examples of the duty to correct thus arise 

from cases where an issuer discovers, or a plaintiff uncovers, 

contradictory information that existed before or at the time of 

the assertion at issue. For instance, in class action suits 

resulting from Facebook’s $16 billion initial public offering 

(IPO) in 2012, investors sued the NASDAQ stock exchange 

owner and certain affiliates over system glitches that 

 

94 Id. at 830 (internal quotation marks omitted) (quoting Hiler, 

supra note 93, at 1116). 
95 JONI S. JACOBSEN, JENNIFER C. RYAN & LAURA A. BRAKE, 

DISCLOSURE DUTIES ARISING UNDER SECTION 10(B): WHEN TO CORRECT OR 

UPDATE 5 (2011) (footnote omitted), 

https://katten.com/files/upload/Disclosure_Duties_Arising_Under_Section_

10B_When_To_Correct_Or_Update.pdf [https://perma.cc/2ZCD-PU76]. 
96 Backman, 910 F.2d at 16–17. 
97 Id. at 17 (quoting Greenfield v. Heublein, Inc., 742 F.2d 751, 758 

(3d Cir. 1984), abrogated on other grounds by Basic Inc. v. Levinson, 485 

U.S. 224 (1988)). 
98 Id. at 17–18. 
99 JACOBSEN ET AL., supra note 95, at 5 (citing Backman, 910 F.2d 

at 17–18). 
100 See, e.g., Stransky v. Cummins Engine Co., 51 F.3d 1329, 1331–

32 (7th Cir. 1995). 



  

1050 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

allegedly hampered trading.101 The investors specifically 

alleged that NASDAQ’s “testing [of] the design of its systems 

in the . . . weeks leading up to Facebook’s IPO . . . revealed 

unresolved technical issues undermining the reliability of 

NASDAQ in executing the anticipated trade volume for the 

[o]ffering,” yet those issues “were not corrected before the IPO 

commenced.”102 Instead, the exchange “made specific 

statements leading up to the Facebook IPO ensuring ‘on-time, 

on-target and ready-to-launch’ technology, that was ‘faster’ 

than any [e]xchange in the world and could operate under 

‘even extremely demanding market conditions.’”103 In the 

court’s view, “[t]hese were not vague, forward-looking 

statements of optimism, but ‘involved the representation of 

existing facts’ concerning NASDAQ’s capability and reliability 

to carry out enormous volumes of orders at sub-microsecond 

speeds, which were readily capable of verification.”104 The 

court found that, because these 

statements were material, [the exchange] had a duty 

to correct and update them once they were found to be 

untrue. . . . Just as a misstatement about a company’s 

primary product affects an investor[‘]s decision to 

purchase that stock, NASDAQ’s failure to correct 

flawed information about its technology capabilities 

could have impacted Plaintiffs’ decision to participate 

 

101 In re Facebook, Inc., IPO Sec. & Derivative Litig., 986 F. Supp. 

2d 428, 439 (S.D.N.Y. 2013). 
102 Id. at 467. 
103 Id. at 465 (quoting Consol. Amended Class Action Complaint 

paras. 173, 183, 188, In re Facebook, Inc., IPO Sec. & Derivative Litig., 986 

F. Supp. 2d 428, 439 (S.D.N.Y. 2013) (MDL No. 12-2389)). 
104 Id. (quoting In re Quintel Ent. Inc. Sec. Litig., 72 F. Supp. 2d 

283, 292 n.4 (S.D.N.Y. 1999)). The court noted that 

NASDAQ’s general disclaimers of ‘unanticipated disruptions in service’ 

or that ‘markets have experienced occasional system failures’ in its annual 

report does not remove its liability when it[s] statements directly touted the 

reliability and capability of handling trade volume as fast as possible in 

light of the upcoming IPO, despite knowledge of its inadequacies. 

Id. at 466 n.23 (citation omitted) (quoting The NASDAQ OMX Grp., Inc., 

Annual Report (Form 10-K), at 25–26 (Feb. 24, 2012)). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1051 

in . . . and ability to trade during [the Facebook] 

[o]ffering.105  

      The court further found that plaintiffs’ allegations, which 

included purported insider knowledge of the problem, 

adequately demonstrated that NASDAQ knew or should have 

known of contemporaneous conditions making their failure to 

correct prior statements touting NASDAQ’s software systems 

materially misleading.106 Based on these circumstances, the 

court refused to dismiss claims that NASDAQ had omitted 

material facts about its capabilities.107 

      Other cases have clarified and expounded upon the duty 

to correct. For example, the duty can be applied to historical 

statements and forward-looking statements that lacked a 

reasonable basis.108 At the same time, courts have identified 

several limitations to the duty to correct. As the Facebook 

court suggested, vague or indefinite statements do not trigger 

the duty, nor does unreliable new information.109 Moreover, 

“courts are hesitant to apply the duty to correct in cases 

 

105 Id. at 465–66. Though the court mentioned both the duty to 

correct and to update, the case should be categorized as a “duty to correct” 

case, as the statements at issue were misleading when made. 
106 Id. at 466. 
107 Id. at 471. For another example of a court imposing a duty to 

correct when defendants learn that their prior statements were untrue 

when made, see, for example, Zwick Partners, LP v. Quorum Health Corp., 

No. 16-cv-2475, 2018 WL 2933406, at *7 (M.D. Tenn. Apr. 19, 2018) (“Given 

the increasing and continued poor performance of CHS, including Quorum 

hospitals, in 2015 and into 2016, Plaintiffs have sufficiently alleged that 

Defendants had a duty to correct their April 1, 2016 statements concerning 

Quorum.”). 
108 JACOBSEN ET AL., supra note 95, at 6. 
109 Facebook, 986 F. Supp. 2d at 465 (emphasizing that the disputed 

statements “were not vague, forward-looking statements of optimism.”); 

Grossman v. Novell, Inc., 120 F.3d 1112, 1125 (10th Cir. 1997) (rejecting a 

duty to correct when a prior “statement was too vague and indefinite”); Moss 

v. HealthCare Compare Corp. (In re HealthCare Compare Corp. Sec. Litig.), 

75 F.3d 276, 282 (7th Cir. 1996) (“[P]laintiffs can only show that a duty to 

correct arose by alleging facts sufficient to demonstrate that the internal 

memorandum [in conflict with the alleged misstatement] was certain and 

reliable, not merely a tentative estimate.”); see also Mendelsohn & Brush, 

supra note 86, at 72–73. 



  

1052 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

involving forward-looking statements unless the . . . 

statements were based on untrue historical information.”110 

And, ordinarily, there is no duty to correct statements made 

by others unless there is some degree of responsibility for 

those third-party statements.111   

2. Duty To Update 

      The “duty to update,” as used herein, describes a duty to 

provide additional information to update or supplement a 

previous disclosure that was accurate when made but becomes 

misleading due to subsequent events.112 As opposed to the 

duty to correct, which is widely recognized, the duty to update 

has been the subject of great debate.113 Various circuits have 

recognized a duty to update that operates as an exception to 

an issuer’s general right to remain silent about new material 

 

110 Mendelsohn & Brush, supra note 86, at 72. 
111 See 1 HAZEN, supra note 45, § 3:52 n.3. For further discussion of 

the duty to correct statements made outside the company and third-party 

liability for the duty to correct, see JACOBSEN ET AL., supra note 95, at 8. It 

remains to be seen how the Supreme Court’s extension of Rule 10b-5 

liability in Lorenzo v. SEC will affect third-party liability under duty to 

correct and duty to update theories. See Lorenzo v. SEC, 139 S. Ct. 1094, 

1100–01 (2019) (holding that disseminating “false or misleading statements 

with intent to defraud can” violate Rules 10b-5(a) and (c) even if the 

disseminator could not be held liable as the maker of an untrue statement 

of material fact under Rule 10b-5(b)). 
112 This Note’s discussion and analysis of the duty to update and 

relevant cases do not consider situations in which a separate duty to disclose 

may apply. However, it is important to recognize that examples exist in 

which there is both a duty to update and an independent duty to disclose, 

creating an additional hurdle for courts trying to define disclosure 

requirements under the former without conflating it with the latter. See 

Mendelsohn & Brush, supra note 86, at 77 (discussing Finnerty v. Stiefel 

Laboratories, Inc., 756 F.3d 1310 (11th Cir. 2014), as a case in which the 

court “framed the disclosure requirement . . . as a ‘duty to update’” even 

though its ruling might also be “explained by disclosure duties arising out 

of the company’s trades in its own securities”). 
113 See id. at 74 (“Some courts have questioned whether this type of 

duty exists at all, . . . . [but a] number of other courts . . . have accepted the 

existence of some formulation of a duty to update.”). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1053 

information.114 Courts that recognize the duty to update have 

typically applied it only to future-oriented, or forward-looking, 

statements.115 Few courts, however, have actually imposed 

liability based on this duty.116   

3. Potential Defenses 

      Before delving into the case law surrounding the duty to 

update, it is important to understand the major defenses for 

forward-looking statements, or statements containing 

predictions about earnings, revenue, and future economic 

performance.117 First, the “bespeaks caution” doctrine 

developed by courts generally protects forward-looking 

statements that adequately disclose the risk factors that 

might cause a different outcome to occur than the one forecast 

by the issuer.118 Under the bespeaks caution doctrine, “[a] 

forward-looking statement accompanied by sufficient 

cautionary language is not actionable because no reasonable 

investor could have found the statement materially 

misleading. In such circumstances, it cannot be supposed by a 

reasonable investor that the future is settled, or unattended 

by contingency.”119 

 

114 See, e.g., Weiner v. Quaker Oats Co., 129 F.3d 310, 318 (3d Cir. 

1997); Zvi Trading Corp. Emps.’ Money Purchase Pension Plan & Tr. v. Ross 

(In re Time Warner Inc. Sec. Litig.), 9 F.3d 259, 267–68 (2d Cir. 1993). On 

the absence of a general duty to disclose, see supra text accompanying notes 

66–73. 
115 See, e.g., IBEW Local Union No. 58 Pension Tr. Fund & Annuity 

Fund v. Royal Bank of Scot. Grp., 783 F.3d 383, 390 (2d Cir. 2015). 
116 See Mendelsohn & Brush, supra note 86, at 74 (“But even courts 

that accept the duty in concept have often stated that it does not apply to 

the circumstances of the case at bar.”). 
117 See 15 U.S.C. § 78u-5(i)(1) (2018) (defining “forward-looking 

statement” for purposes of a statutory safe harbor). 
118 See Iowa Pub. Emps.’ Ret. Sys. v. MF Glob., Ltd., 620 F.3d 137, 

141 & n.8 (2d Cir. 2010). 
119 Id. at 141 (footnote omitted) (citation omitted) (citing P. Stolz 

Fam. P’ship v. Daum, 355 F.3d 92, 96–97 (2d Cir. 2004)). 



  

1054 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

      A second and related defense is a statutory “counterpart” 

to the bespeaks caution doctrine.120 The Private Securities 

Litigation Reform Act of 1995 (PSLRA), which created a safe 

harbor for forward-looking statements, expressly addresses 

the absence of a duty to update.121 The PSLRA added section 

27A122 to the Securities Act and section 21E123 to the Exchange 

Act. Section 27A and section 21E define forward-looking 

statements generally as statements that reference future 

plans or performance, such as revenue projections and 

statements tied to future economic performance of a company, 

but also as “any statement of the assumptions underlying or 

relating to any [such] statement[s].”124 The safe harbor 

protects an issuer when its statement is “(i) identified as a 

forward-looking statement, and is accompanied by 

meaningful cautionary statements identifying important 

factors that could cause actual results to differ materially 

from those in the forward-looking statement; or (ii) [is] 

immaterial,”125 or if the plaintiff fails to demonstrate that the 

statement was made with “actual knowledge” that it “was 

false or misleading.”126 When information falls into one of 

these categories, the PSLRA “declares that [it] is not fraud for 

purposes of private securities litigation” as long as it is “made 

without actual fraudulent intent.”127 

      There are limits to the protections conferred upon issuers 

under both the bespeaks caution doctrine and the PSLRA safe 

 

120 Rombach v. Chang, 355 F.3d 164, 173 (2d Cir. 2004); see also 

Langevoort, supra note 41, at 995 (“The Act codified the judge-made 

‘bespeaks caution’ doctrine, albeit without the nuance some courts had 

created in applying that principle.”). 
121 The statutory safe harbor, which appears in both the Securities 

Act and the Exchange Act, protects forward-looking statements that are 

“identified as [such], and . . . accompanied by meaningful cautionary 

statements.” 15 U.S.C. §§ 77z-2(c)(1)(A)(i), 78u-5(c)(1)(A)(i). 
122 Private Securities Litigation Reform Act of 1995 (PSLRA), Pub. 

L. No. 104-67, § 102, 109 Stat. 737, 749–53 (codified at 15 U.S.C. § 77z-2). 
123 Id. § 102, 109 Stat. at 753–56 (codified at 15 U.S.C. § 78u-5). 
124 See 15 U.S.C. §§ 77z-2(i)(1), 78u-5(i)(1). 
125 Id. §§ 77z-2(c)(1)(A), 78u-5(c)(1)(A). 
126 Id. §§ 77z-2(c)(1)(B), 78u-5(c)(1)(B). 
127 Langevoort, supra note 41, at 994–95. 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1055 

harbor. Where forward-looking language does “not expressly 

warn of or d[oes] not directly relate to the risk that brought 

about plaintiffs’ loss,” a plaintiff may overcome such 

cautionary language.128 Further, mere boilerplate words of 

caution—for example, a statement at the beginning of a 

conference call that merely warns that forward-looking 

statements are “subject to certain risks and uncertainties”—

are insufficient notices of risk and do not protect forward-

looking statements.129  

      Still, these defenses have “become an integral component 

of” promoting full disclosure, allowing issuers to feature 

“warnings” in their “periodic reports and other 

communications in which they disseminate such [forward-

looking] soft information as earnings estimates . . ., growth in 

demand for their products, cash flow, and the like.”130 

Critically, the PSLRA specifically states that “[n]othing in this 

section shall impose upon any person a duty to update a 

forward-looking statement.”131 As one commentator has 

explained, “the statutory safe harbor is a trade-off: effective 

immunization of forward-looking information from liability so 

as to encourage honest voluntary disclosures that would 

otherwise not be made because of fear of liability.”132 

      This fear of liability has only been exacerbated by the 

onset of COVID-19. While the lasting effects of the pandemic 

are yet to be determined, companies are aware of how 

“securities litigation is triggered by the announcement or 

 

128 Halperin v. eBanker USA.COM, Inc., 295 F.3d 352, 359 (2d Cir. 

2002) (citing Hunt v. All. N. Am. Gov’t Income Tr., Inc., 159 F.3d 723, 729 

(2d Cir. 1998)). 
129 Ill. State Bd. of Inv. v. Authentidate Holding Corp., 369 F. 

App’x 260, 264 n.3 (2d Cir. 2010) (summary order) (internal quotation 

marks omitted) (citing Halperin, 295 F.3d at 359). 
130 Ann Morales Olazábal, False Forward-Looking Statements and 

the PSLRA’s Safe Harbor, 86 IND. L.J. 595, 597–98 (2011) (citing Karen K. 

Nelson & A.C. Pritchard, Litigation Risk and Voluntary Disclosure: The Use 

of Meaningful Cautionary Language, ANN. CONF. ON EMPIRICAL LEGAL 

STUD., Aug. 2007, at 1, 3). For a thorough discussion of the PSLRA’s 

legislative history and purpose, see id. at 613–18. 
131 15 U.S.C. §§ 77z-2(d), 78u-5(d). 
132 Langevoort, supra note 41, at 995. 



  

1056 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

occurrence of a significant adverse event.”133 As a result, a 

renewed emphasis has been placed upon these safe harbors 

and the ways companies can avail themselves of their 

protections; careful attention to the drafting of disclosures can 

help avoid potential liability,134 particularly within the context 

of the duty to update. 

III. APPROACHES TO THE DUTY TO UPDATE 

A. Recognition of the Duty To Update 

      Scholars have generally cited Ross v. A.H. Robins Co.135 as 

the first case to have raised the question of whether a duty to 

update might exist.136 The Ross plaintiffs alleged that a 

company’s failure to “correct” favorable statements regarding 

the safety, effectiveness, and future of its product violated 

section 10(b) of the Exchange Act and Rule 10(b)(5).137 The 

plaintiffs argued that the company had a duty to provide 

additional disclosures as evidence became available 

surrounding the safety and effectiveness of its product and as 

 

133 See Jay Kasner, Scott Musoff & Susan Saltzstein, Skadden, 

Arps, Slate, Meagher & Flom LLP, Potential Securities Litigation Issues, in 

CORONAVIRUS/COVID-19 UPDATE 8, 8 (2020), 

https://www.skadden.com/insights/publications/2020/03/coronavirus-covid-

19-update [https://perma.cc/4YB4-9HUN] (click “PDF”). 
134 Id. (“Corporate disclosures relating to performance, projections 

and the potential impact of the virus often will be viewed in hindsight . . . . 

In particular, companies should pay close attention to updating risk factors 

and cautionary language, especially those surrounding forward-looking 

statements in order to maximize the protections of the PSLRA’s safe 

harbor.”). 
135 465 F. Supp. 904 (S.D.N.Y.), rev’d, 607 F.2d 545 (2d Cir. 1979) 

(reversing on a remedial issue unrelated to the duty to update). 
136 See, e.g., Porter, supra note 39, at 2213; Rosenblum, supra note 

81, at 290 (“The concept that an issuer has a duty to correct its own 

statements gained widespread judicial and academic acceptance following 

the decision . . . in Ross v. A.H. Robins Co.”); Steven E. Bochner & Samir 

Bukhari, The Duty To Update and Disclosure Reform: The Impact of 

Regulation FD and Current Disclosure Initiatives, 7 STAN. J.L. BUS. & FIN. 

225, 232 (2002). 
137 Ross, 465 F. Supp. at 906. 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1057 

numerous class action product liability suits were being filed 

against the company.138 The court agreed, explaining that “[i]t 

is now clear that there is a duty to correct or revise a prior 

statement which was accurate when made but which has 

become misleading due to subsequent events.”139 Given the 

undeveloped status of the duties to correct and update at the 

time, the court used the term “duty to correct” when 

discussing the company’s disclosure obligations when, by 

today’s understanding, the issue concerned the duty to 

update.140 Unfortunately, this contributed to subsequent 

courts’ misuse of the term “duty to correct” when referring to 

the duty that may arise when a statement becomes materially 

misleading in light of subsequent events—i.e., the duty to 

update.141 

      The same mistaken use of the “duty to correct” to describe 

the duty to update was present in the First Circuit’s opinion 

in Backman v. Polaroid Corp.142 The case concerned Polaroid’s 

issuance of a third quarter report that announced record 

earnings and sales for the quarter and the first nine months 

of 1978, while briefly acknowledging substantial expenses 

related to its instant motion picture system, Polavision.143 

After a negative market reaction to news of Polavision’s 

 

138 Id. at 906–07. 
139 Id. at 908. “The district court ultimately granted the defendant’s 

motion for summary judgement based upon the plaintiffs’ failure to 

adequately plead fraud with particularity as required by Rule 9(b) of the 

Federal Rules of Civil Procedure,” but, “for reasons unknown,” continued on 

to “the merits of the case.” Porter, supra note 39, at 2213 (citing Ross, 465 

F. Supp. at 913). 
140 Porter, supra note 39, at 2214–15. 
141 See, e.g., Kamerman v. Steinberg, 123 F.R.D. 66, 72 (S.D.N.Y. 

1988) (“The law in this and other Circuits establish a general duty to correct 

under Section 10(b) and Rule 10b–5: ‘it is now clear that there is a duty to 

correct or revise a prior statement which was accurate when made but 

which has become misleading due to subsequent events.’” (quoting Ross, 465 

F.Supp. at 908)). 
142 910 F.2d 10 (1st Cir. 1990) (en banc). 
143 Id. at 15–16; see also id. at 16–17 (increasing confusion by also 

referring to the duty to correct in appropriate terms: “[o]bviously, if a 

disclosure is in fact misleading when made, and the speaker thereafter 

learns of this, there is a duty to correct it”). 



  

1058 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

continuing losses in a subsequent press release announcing 

yearly earnings, plaintiffs brought suit against the company 

for breaching a duty to disclose adverse material facts 

concerning sales difficulties with Polavision.144 Initially, a 

panel found that even if the optimistic third quarter report 

was not misleading at the time of its issuance, there was 

“sufficient evidence to support a jury’s determination that the 

report’s relatively brief mention of Polavision difficulties 

became misleading in light of the subsequent information 

acquired by Polaroid indicating the seriousness of Polavision’s 

problems.”145 The panel decision “intensified concern that a 

duty to update might be broadly applied to all types of 

statements,” as it held that Polaroid “was required to update 

statements made in the third quarter report once it became 

apparent that Polavision would not be the success Polaroid 

had previously anticipated.”146 

      In a rehearing by the First Circuit, the full court withdrew 

the panel decision and declined to reach the issue of the duty 

to update.147 The court explained that since Polaroid’s 

statements were pure statements of historical fact correct at 

the time when made and “precisely correct thereafter,” there 

was no duty to update the earlier statements regardless of 

subsequent changing circumstances.148 Still, the court went 

further, stating that “in special circumstances, a statement, 

correct at the time, may have a forward intent and 

connotation upon which parties may be expected to rely. If this 

is a clear meaning, and there is a change, correction, more 

exactly, further disclosure, may be called for.”149 The court 

concluded by acknowledging “amici apprehension because of 

 

144 Id. at 19 (Bownes, J., dissenting). 
145 Id. at 17 (majority opinion) (quoting Backman v. Polaroid Corp., 

Nos. 89-1171, 89-1172, 1990 U.S. App. LEXIS 787, at *28 (1st Cir.), rev’d en 

banc, 910 F.2d 10). 
146 Porter, supra note 39, at 2214. 
147 Backman, 910 F.2d at 10, 17–18. 
148 Id. at 17–18. 
149 Id. at 17. 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1059 

the panel opinion’s not only requiring update, but requiring it 

in terms of a new duty that had never been undertaken.”150 

      In 1993, the Second Circuit decided In re Time Warner Inc. 

Securities Litigation,151 which further fleshed out the duty to 

update doctrine. Time Warner sought to alleviate its 

significant debt troubles by embarking on a highly publicized 

campaign to find international “strategic partners” for 

investments.152 When the campaign failed, Time Warner 

instead announced a stock offering, which resulted in the 

dilution of its shareholders’ rights.153 Shareholders sued Time 

Warner, alleging that a series of statements from Time 

Warner officials were materially misleading, as they 

misrepresented the status of the ongoing strategic 

partnership discussions and failed to disclose consideration of 

the stock offering alternative.154 The statements consisted of 

generally positive messages 

concerning the progress of the search for strategic 

partners, and impl[ied] to varying degrees that 

significant partnerships w[ould] be consummated and 

announced in the near future. None of the statements 

acknowledged that negotiations with prospective 

partners were going less well than expected or that an 

alternative method of raising capital was under 

consideration.155 

      The court first addressed the plaintiffs’ theory that the 

defendants’ statements touting strategic partnerships gave 

rise to a duty to disclose as the “alliance negotiations” 

developed.156 The court “agree[d] that a duty to update 

opinions and projections may arise if the original opinions or 

projections have become misleading as the result of 

 

150 Id. at 18. 
151 Zvi Trading Corp. Emps.’ Money Purchase Pension Plan & Tr. 

v. Ross (In re Time Warner Inc. Sec. Litig.), 9 F.3d 259 (2d Cir. 1993). 
152 Id. at 262. 
153 Id. 
154 Id. 
155 Id. 
156 Id. at 267. 



  

1060 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

intervening events.”157 However, the public statements were 

insufficiently specific to give rise to a duty to update, which 

required forward-looking statements with “definite positive 

projections.”158 Rather, “the statements suggest[ed] only the 

hope of any company, embarking on talks with multiple 

partners, that the talks would go well.”159 Interestingly, the 

court provided an example of what circumstances would 

create a duty to update these statements: 

Although the statements are generally open-ended, 

there is one sense in which they have a solid core. The 

statements represent as fact that serious talks with 

multiple parties were ongoing. If this factual assertion 

ceased to be true, defendants would have had an 

obligation to update their earlier statements. But the 

complaint does not allege that the talks ever stopped 

or ceased to be “serious,” just that they eventually 

went poorly.160 

      As to the allegation of a failure to disclose the 

simultaneous consideration of alternative methods of raising 

capital, the court stated that where “a corporation is pursuing 

a specific business goal and announces that goal as well as an 

intended approach for reaching it, it may come under an 

obligation to disclose other approaches to reaching the goal 

when those approaches are under active and serious 

consideration.”161 “Whether consideration of . . . alternate 

approach[es] constitute[d]” a material fact and whether 

 

157 Id. (first citing W. Alton Jones Found. v. Chevron U.S.A. Inc. (In 

re Gulf Oil/Cities Serv. Tender Offer Litig., 725 F. Supp. 712, 745–49 

(S.D.N.Y.1989); and then citing In re Warner Commc’ns Sec. Litig., 618 

F.Supp. 735, 752 (S.D.N.Y. 1985), aff’d, 798 F.2d 35 (2d Cir. 1986)). 
158 Id. 
159 Id. 
160 Id. at 267 n.4. Time Warner presents a prime example of the 

confusion surrounding when a duty to update arises: the line between an 

allegation that negotiations ceased to be “serious” and an allegation that 

negotiations “eventually went poorly” is very fine, as the two seem 

comparable, if not synonymous. 
161 Id. at 268. 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1061 

nondisclosure of that material fact made the original 

disclosure misleading were questions left to the jury.162 

      Following these decisions, courts continue to confront duty 

to update issues raised by both private litigants and the SEC. 

Absent clear legislative direction, the circuit courts have 

either split or remained silent on the issue.163 Courts that do 

entertain the existence of a duty to update have constructed a 

general framework as to which statements the duty may 

apply: (1) statements that remain “alive” in the minds of 

investors, and (2) statements that relate to a “fundamental 

change” to the issuer.164 There is also a general consensus that 

the duty to update does not apply to certain statements: (1) 

financial projections, (2) statements to which specific 

cautionary language appropriately attaches, (3) vague 

statements and puffery, and (4) statements of historical 

fact.165 The net result is that the duty to update has only been 

applied in specific, limited circumstances, and potential 

liability under the duty is highly dependent on the circuit in 

which the case is brought.166 

1. Statements Remaining “Alive” 

      Ross v. A.H. Robins was not only among the first reported 

cases to outline the contours of the duty to update, but also 

became the source for the idea that the duty to update prior 

statements “exists so long as the prior statements remain 

 

162 Id. 
163 Compare Gallagher v. Abbott Lab’ys, 269 F.3d 806, 808 (7th Cir. 

2001) (“We do not have a system of continuous disclosure. Instead firms are 

entitled to keep silent (about good news as well as bad news) unless positive 

law creates a duty to disclose.”), with City of Edinburgh Council v. Pfizer, 

Inc., 754 F.3d 159, 176 (3d Cir. 2014) (“[W]e have held that a duty to update 

applies[.]” (citing United States v. Schiff, 602 F.3d 152, 170 (3d Cir. 2010)). 
164 See Mendelsohn & Brush, supra note 86, at 74–75, 78–79; 

JACOBSEN, ET AL., supra note 95, at 9, 11–12 (suggesting that statements 

must be both alive and related to a fundamental change). 
165 See Mendelsohn & Brush, supra note 86, at 75–78; JACOBSEN, ET 

AL., supra note 95, at 9–11. 
166 See Mendelsohn & Brush, supra note 86, at 74–80 (discussing 

the duty to update in various circuits). 



  

1062 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

‘alive.’”167 “[M]any courts have [since] embraced the broad 

conclusion that the duty to update is triggered when the 

statement in question is clear, factual and forward-looking, 

such that some continuing representation remains ‘alive’ in 

the mind of investors when circumstances change.”168 

      Although this is an elastic concept, a few courts have 

suggested that statements are “alive” as long as reasonable 

investors rely on them. “For example, in . . . Burlington Coat 

Factory . . ., the Third Circuit . . . considered the issue of 

whether a company had a duty to update specific earnings 

projections.”169 The court aptly noted that, although it had 

“generally recognized that a duty to update might exist under 

certain circumstances, [it had] not clarified when such 

circumstances might exist,” nor the particular “question of 

whether a duty to update might exist for ordinary, run-of-the-

mill forecasts, such as the earnings projection in th[at] 

case.”170 

      The Third Circuit explained that for a plaintiff to establish 

“that a duty to update a forward-looking statement arose on 

account of an earlier-made projection,” the plaintiff had to 

allege “that the projection contained an implicit factual 

representation that remained ‘alive’ in the minds of investors 

as a continuing representation. Determining whether such a 

representation is implicit in an ordinary forecast is a function 

 

167 Ross v. A.H. Robins, 465 F.Supp. 904, 908 (S.D.N.Y.), rev’d on 

other grounds, 607 F.2d 545 (2d Cir. 1979). 
168 ERIC R. SMITH, THOMAS D. WASHBURNE, JR. & UYEN H. PHAM, 

DUTY TO UPDATE PREVIOUSLY DISCLOSED INFORMATION 3 (2011), 

https://www.venable.com/files/Publication/d90ad0bd-0947-4956-aa70-

1026f1ac03be/Presentation/PublicationAttachment/cf3d0d7f-ca04-4b19-

96e1-

1510529d9821/Duty_to_Update_Previously_Disclosed_Information.pdf 

[https://perma.cc/W9FT-Y2TP]. 
169 Id. (citing In re Burlington Coat Factory Sec. Litig., 114 F.3d 

1410 (3d Cir. 1997)). In essence, the claim in that case alleged that “the 

disclosure of a single specific forecast produced a continuous duty to update 

the public with either forecasts or hard information that would in any way 

change a reasonable investor’s perception of the originally forecasted 

range.” Burlington, 114 F.3d at 1432. 
170 Id. at 1431–32. 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1063 

of what a reasonable investor expects as a result of the 

background regulatory structure.”171 Based on this conception 

of the duty to update, the court rejected the argument “that 

an ordinary earnings projection contains an implicit 

representation on the part of the company that it will update 

the investing public with all material information that relates 

to that forecast.”172 The court suggested that an accurate 

disclosure of past success does not contain a representation 

that a trend will continue, and that a “judicially created rule 

that triggers a duty of continuous disclosure of all material 

information every time a single specific earnings forecast is 

disclosed would likely result in a drastic reduction in the 

number of such projections made by companies”—to the 

detriment of investors.173 

      Among the circuits that have accepted the “remains alive” 

principle, several limitations have been imposed, which has 

resulted in far more examples of what does not “remain alive” 

than what actually does. First, as Burlington demonstrates, 

there is typically no duty to update ordinary financial 

projections or predictions.174 This limitation was made even 

clearer with the enactment of the PSLRA,175 as earnings 

projections fall squarely within the statute’s definition of 

forward-looking statements and thus cannot be subject to the 

duty if accompanied by sufficient cautionary language.176 
 

171 Id. at 1432 (citations omitted). 
172 Id. at 1433. 
173 Id. 
174 Id. at 1432–33; see also In re Advanta Corp. Sec. Litig., 180 F.3d 

525, 536–37 (3d Cir. 1999) (rejecting under the PSLRA safe harbor a duty 

to update claim centered on “a projection of revenues”), abrogated on other 

grounds by Institutional Invs. Grp. v. Avaya, Inc., 564 F.3d 242 (3d Cir. 

2009); Hillson Partners Ltd. v. Adage, Inc., 42 F.3d 204, 219 (4th Cir. 1994) 

(“Assuming there can ever be a ‘duty to update,’ there was no such duty 

here. The statements at issue here were predictions, neither material under 

the federal securities laws nor pled with sufficient particularity. . . . There 

is no duty to update such statements on the basis of subsequent events.” 

(citing Zvi Trading Corp. Emps.’ Money Purchase Pension Plan & Tr. v. Ross 

(In re Time Warner Inc. Sec. Litig.), 9 F.3d 259, 267 (2d Cir. 1993))) 
175 On the PSLRA, see supra text accompanying notes 120–132. 
176 JACOBSEN ET AL., supra note 95, at 9 (citing 15 U.S.C. § 78u-5(c)–

(d) (2006)). 



  

1064 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

Second, specific cautionary language which warns investors 

that statements should not be interpreted as containing any 

implicit representation regarding subsequent events or future 

disclosures by the company will tend to negate a duty to 

update under the PSLRA or the “bespeaks caution” 

doctrine.177 However, according to the Second Circuit, general 

boilerplate cautionary language is insufficient to shield 

liability under a duty to update theory.178 Third, as the Time 

Warner court explained, the duty does not apply to vague 

statements of optimism or hope.179 While some courts have 

recognized that forward-looking statements carrying a 

positive implication arguably could create a duty to update, 

one does not attach where the statements are only optimistic 

statements that are too vague and loose to be actionable.180 

Finally, the duty generally has not been applied to statements 

of pure historical fact that were accurate when made,181 

 

177 See supra Section II.C.3; Grossman v. Novell, Inc., 120 F.3d 

1112, 1119–21 (10th Cir. 1997) (finding certain statements too vague and 

others not actionable because of clear cautionary language that prevented 

them from being materially misleading); JACOBSEN ET AL., supra note 95, at 

9–11. 
178 Ill. State Bd. of Inv. v. Authentidate Holding Corp., 369 F. App’x. 

260, 263, 264 & n.3 (2d Cir. 2010) (summary order). But see Mendelsohn & 

Brush, supra note 86, at 78 n.77 (“[T]he PSLRA arguably provides a lower 

bar for oral forward-looking statements to be nonactionable: they need only 

include disclosure that the company can provide forward-looking 

information, actual results may materially differ, and factors that could 

cause a difference are explained in the risk factors sections of the company’s 

SEC filings.” (citing Private Securities Litigation Reform Act of 1995 

(PSLRA), Pub. L. No. 104-67, § 102, 109 Stat. 737, 753–56 (codified at 15 

U.S.C. § 78u-5(c)(2) (2018))). 
179 See Time Warner, 9 F.3d at 267 (discussing “statements 

suggest[ing] only the hope of any company, embarking on talks with 

multiple partners”); San Leandro Emergency Med. Grp. Profit Sharing Plan 

v. Philip Morris Cos., 75 F.3d 801, 811 (2d Cir. 1996). 
180 See, e.g., Gross v. Summa Four, Inc., 93 F.3d 987, 995 (1st Cir. 

1996) (citing Glassman v. Computervision Corp., 90 F.3d 617, 635 (1st Cir. 

1996); Shaw v. Digit. Equip. Corp., 82 F.3d 1194, 1217–19 (1st Cir. 1996)), 

superseded by statute on other grounds, PSLRA § 101(b)). 
181 See In re Yahoo! Inc. Sec. Litig., No. C 11-02732, 2012 WL 

3282819, at *21 (N.D. Cal. 2012) (rejecting a duty to update claim because 

the statements at issue were “historical opinions of the value of the 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1065 

though other circuits have “raised the possibility . . . that the 

duty to update may be applicable to a historical statement 

that had a ‘forward intent and connotation’ that parties relied 

upon.”182 

2. Statements Representing a Fundamental 
Change 

      Although many courts have focused their analysis on 

whether the statement in question contains continuing 

representations that remain “alive” in some sense, other 

courts have framed the duty to update as requiring that the 

statement relate to a fundamental change to the issuer. The 

Third Circuit has been particularly instructive in this area, 

having noted in Burlington that “the duty to update, to the 

extent it might exist, would be a narrow one to update the 

public as to extreme changes in the company’s originally 

expressed expectation of an event such as a takeover, merger 

or liquidation.”183 Even prior to Burlington, the Third Circuit 

had explored a duty to update on the basis that statements 

about fundamental changes may carry an implicit promise 

that they will be updated. In both Greenfield184 and In re 

Phillips,185 the initial disclosures that were argued to have 

triggered the duty to update involved information about 

events that could have fundamentally changed the natures of 

the companies involved. Specifically, both cases involved 

 

investment at the time the statement was made” and because they were 

vague expressions of optimism). 
182 See Mendelsohn & Brush, supra note 86, at 77 (quoting 

Backman v. Polaroid Corp., 910 F.2d 10, 17 (1st Cir. 1990) (en banc)). 
183 Id. at 79 (internal quotation marks omitted) (quoting In re 

Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 n.20 (3d Cir. 

1997)). 
184 Greenfield v. Heublein, Inc., 742 F.2d 751 (3d Cir. 1984), 

abrogated by Basic Inc. v. Levinson, 485 U.S. 224 (1988) (criticizing a bright-

line materiality test advocated in Greenfield). 
185 In re Phillips Petroleum Sec. Litig., 881 F.2d 1236 (3d Cir. 1989). 



  

1066 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

takeover attempts, and the plaintiffs claimed that they should 

have been updated with information as to those attempts.186 

Where the initial disclosure relates to the 

announcement of a fundamental change in the course 

the company is likely to take, there may be room to 

read in an implicit representation by the company 

that it will update the public with news of any radical 

change in the company’s plans—e.g., news that the 

merger is no longer likely to take place.187 

Though the duty was not found in either situation,188 the cases 

demonstrate “attempts to balance a system of non-continuous 

disclosure with the interests of investors when significant 

developments . . . related to previously released plans for 

major transactions” occur.189 

B. Rejection of the Duty To Update 

      The Seventh Circuit stands as the lone appellate court 

that has rejected outright any duty to update beyond the 

periodic disclosure obligations of a public company.190 In 

 

186 See Greenfield, 742 F.2d at 757–58; Phillips, 881 F.2d at 1239, 

1245. 
187 Burlington, 114 F.3d at 1433–34. 
188 Greenfield, 742 F.2d at 758–59 (recognizing that a duty to 

update may apply to a statement about takeover attempts, but ruling that 

disclosure was not required because the company had not made any prior 

statements on the subject that could have generated a duty to update); In 

re Phillips Petroleum Sec. Litig., 881 F.2d at 1246 (declining to require 

update to a statement about a takeover attempt in part because plaintiffs 

did not produce evidence of a relevant subsequent change of intent). For a 

more recent example, see United States v. Schiff, where the Third Circuit 

declined to impose a duty to update statements regarding the issuer’s sales 

volumes, suggesting that such statements were not fundamental enough to 

trigger a duty to update. 602 F.3d 152, 170 (3d Cir. 2010). 
189 Mendelsohn & Brush, supra note 86, at 78–79. 
190 See, e.g., Higginbotham v. Baxter Int’l Inc., 495 F.3d 753, 760 

(7th Cir. 2007) (rejecting a duty to update before the next quarterly report); 

Gallagher v. Abbott Lab’ys, 269 F.3d 806, 808–09 (7th Cir. 2001) (“We do 

not have a system of continuous disclosure. Instead firms are entitled to 

keep silent (about good news as well as bad news) unless positive law 

creates a duty to disclose. . . . [J]udges have no authority to scoop the 

political branches and adopt continuous disclosure under the banner of Rule 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1067 

Stransky v. Cummings Engine Co., the Seventh Circuit 

concluded that Rule 10b-5 does not contemplate a duty to 

update since such a duty would come after the original 

statement in question, and the rule itself considers the 

“circumstances under which [statements] were made.”191 As 

the court stated, “[t]he rule implicitly precludes basing 

liability on circumstances that arise after the speaker makes 

the statement.”192 Furthermore, “[t]he securities laws 

approach matters from an ex ante perspective: just as a 

statement true when made does not become fraudulent 

because things unexpectedly go wrong, so a statement 

materially false when made does not become acceptable 

because it happens to come true.”193 

      In Gallagher v. Abbott Laboratories, the Seventh Circuit 

again refused to acknowledge a duty to update.194 Gallagher 

distinguished between a duty to update disclosures by adding 

the latest information and a duty to correct disclosures false 

when made, holding that while the Exchange Act may require 

the latter, it does not require not the former.195 The court 

rationalized that U.S. securities regulation is premised upon 

 

10b-5.”); Stransky v. Cummins Engine Co., 51 F.3d 1329, 1332 (7th Cir. 

1995) (finding that a company has no duty to update a historical statement 

that was accurate when made). 
191 Stransky, 51 F.3d at 1332 (emphasis omitted) (quoting 17 C.F.R. 

§ 240.10b-5(b)). 
192 Id. 
193 Id. (internal quotation marks omitted) (quoting Pommer v. 

Medtest Corp., 961 F.2d 620, 623 (7th Cir. 1992), superseded by statute on 

other grounds, Federal Deposit Insurance Corporation Improvement Act of 

1991, Pub. L. No. 102-242, § 476, 105 Stat. 2236, 2387 (codified at 15 U.S.C. 

§ 78aa-1 (2018)). 
194 Gallagher, 269 F.3d at 808–09. 
195 Id. at 810; see also Higginbotham, 495 F.3d at 760–61 

(explaining and reaffirming Gallagher’s holding). The Seventh Circuit has 

recognized that the duty to correct may arise in certain circumstances. See 

Moss v. HealthCare Compare Corp. (In re HealthCare Compare Corp. Sec. 

Litig.), 75 F.3d 276, 282 (7th Cir. 1996) (“[W]e decline to . . . adopt[] a bright-

line rule that no duty to correct exists in any case. Rather, . . . plaintiffs can 

only show that a duty to correct arose by alleging facts sufficient to 

demonstrate that the internal memorandum [in conflict with the alleged 

misstatement] was certain and reliable, not merely a tentative estimate.”). 



  

1068 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

a periodic disclosure system which, unlike a continuous 

disclosure system, does not require a duty to update.196 Thus, 

the Seventh Circuit’s rejection of the duty to update has 

largely been based on the pre-existing obligations imposed in 

the SEC’s disclosure regime and the court’s refusal to require 

anything beyond them.197 As the Seventh Circuit succinctly 

stated in the years following Gallagher, “what rule of law 

requires 10–Q reports to be updated on any cycle other than 

quarterly? That’s what the ‘Q’ means. . . . The securities laws 

create a system of periodic rather than continual 

disclosures.”198 

C. The Ninth Circuit Tackles the Duties To Correct 
and Update 

      While many circuits have taken some position on the duty 

to update, others have remained undecided on the matter.199 

The Ninth Circuit, for example, had refused to rule on this 

“novel question of law.”200 Recently, however, the court may 

have implicitly taken a stance on the duty in Khoja v. Orexigen 

Therapeutics, Inc. (Khoja II), where it affirmed in part and 

reversed in part the district court’s dismissal of a securities 

 

196 Gallagher, 269 F.3d at 808–10. 
197 See id. at 809–10 (explaining the disclosure requirements of the 

Securities Act, Exchange Act, and SEC regulations, emphasizing the 

periodic, rather than continuous, nature of those requirements). 
198 Higginbotham, 495 F.3d at 760 (citing Gallagher, 269 F.3d at 

810). 
199 See, e.g., Helwig v. Vencor, Inc., 251 F.3d 540, 561 (6th Cir. 2001) 

(en banc) (“Though the [PSLRA] does not impose a ‘duty to update,’ and we 

do not decide today whether such an obligation exists, we at least require 

an actor to ‘provide complete and non-misleading information with respect 

to the subjects on which he undertakes to speak.’” (footnote omitted) 

(citation omitted) (citing 15 U.S.C. § 78u-5(d)) (quoting Rubin v. Schottstein, 

Zox & Dunn, 143 F.3d 263, 268 (6th Cir. 1998))), abrogated on other grounds 

by Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551 U.S. 308 (2007). 
200 Roberts v. Foxhollow Techs., Inc. (In re FoxHollow Techs., Inc. 

Sec. Litig.), 359 F. App’x 802, 804–05 (9th Cir. 2009) (refusing to decide 

whether a duty to update exists because the statements at issue were not 

“clear, factual, and forward-looking, such that some continuing 

representation remain[ed] alive in the minds of investors when 

circumstances change”). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1069 

fraud class action complaint.201 Lead plaintiff Karim Khoja 

sued Orexigen Therapeutics, Inc. and several of its executives, 

alleging violations of section 10(b) of the Exchange Act and 

Rule 10b-5 for making false or misleading statements and 

omitting material information about clinical trials (the “Light 

Study”) involving Orexigen’s drug in development to treat 

obesity.202 Orexigen had filed a Form 8-K in March 2015 that 

described the Light Study and the “unexpectedly positive” 

drug results that had been gathered up to that point in time 

(the “25 percent interim results”).203 “Securities [a]nalysts 

responded immediately and positively to the revelations 

about” the drug, and “Orexigen’s stock[] surged.”204 “Weeks 

later, on March 26, 2015,” Orexigen discovered “that, as the 

Light Study reached 50 percent completion (‘50 percent 

interim results’), the Light Study no longer indicated a heart 

benefit from [the drug], contrary to what the earlier 25 percent 

interim results suggested.”205 Among other things, Khoja 

claimed that Orexigen “omitted the 50 percent interim results 

[from its Form 8-K], which ‘demonstrated that [Orexigen’s] 

prior representations about [the drug’s] purported [heart] 

benefit were false.’”206 

      The district court found that Orexigen had no duty to 

disclose those results.207 “The court reasoned that Orexigen’s 

earlier statements about the 25 percent interim results 

remained accurate because th[e] results ‘still showed “a 

positive effect[.]”’”208 The Ninth Circuit reversed the district 

 

201 Khoja v. Orexigen Therapeutics (Khoja II), Inc., 899 F.3d 988, 

1018 (9th Cir. 2018), cert. denied, 139 S. Ct. 2615 (2019) (mem.). 
202 Id. at 994, 997. 
203 Id. at 994-95. The shorthand is the court’s. Id. at 994 (internal 

quotation marks omitted). 
204 Id. at 995. 
205 Id. at 996. 
206 Id. at 1013 (second and fourth alterations in original) (quoting 

Consol. Complaint for Violation of the Fed. Sec. L. at 43, Khoja v. Orexigen 

Therapeutics, Inc. (Khoja I), 189 F. Supp. 3d 998 (S.D. Cal. 2016) (No. 15-

CV-540), aff’d in part, rev’d in part, and remanded, 899 F.3d 988, cert. 

denied, 139 S. Ct. 2615 (2019) (mem.)). 
207 Id. at 1015. 
208 Id. (quoting Khoja I, 189 F. Supp. 3d at 1019). 



  

1070 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

court’s dismissal of this claim, finding that the plaintiffs 

sufficiently pled that it was misleading for the defendants to 

fail to disclose that they were in possession of new results 

indicating that the 25 percent interim results, which the 

defendants had previously touted, “were not so promising 

after all.”209 “Although the 25 percent interim results were still 

technically accurate, the issue [was] whether, having learned 

new information that diminished the weight of those results, 

Orexigen was obligated to share that information.”210 The 

court concluded that the defendants “had a duty to disclose” 

that the new results “diminished the weight” of the earlier 

interim results.211   

      The defendants filed a petition for certiorari, challenging 

the Ninth Circuit’s decision and requesting that the Supreme 

Court restrict a publicly traded company’s duty to update 

earlier statements that were “accurate when made but later 

became misleading because of subsequent events.”212 The 

petition argued that the Ninth Circuit had created a duty to 

“update an accurate statement of historical fact when the 

‘value’ or ‘weight’ of that statement has been ‘diminished’ by 

subsequent events.”213 This ruling, argued the petitioners, 

“directly conflict[ed] with every other circuit that ha[d] 

 

209 Id. 
210 Id. There is some debate over whether the court instead 

implicated the duty to correct, rather than the duty to update. Matthew 

Dallett, Is There a “Duty To Update” Public Disclosures? Supreme Court 

Declines To Review Decision That Did Not Clearly Present the Issue, JD 

SUPRA (June 14, 2019), https://www.jdsupra.com/legalnews/is-there-a-duty-

to-update-public-36586/ [https://perma.cc/65L5-ZTJK] (discussing 

plaintiffs’ characterization, in their response to defendants’ petition for 

certiorari, of the Ninth Circuit’s decision as imposing a duty to correct). 
211 Khoja II, 899 F.3d at 1015. (“The Complaint sufficiently pled 

that, even if investors understood that more results were necessary to 

confirm [the drug’s] potential heart benefit, the 25 percent interim results 

clearly suggested a promising venture. Naturally, if subsequent data 

indicated those earlier interim results were not so promising after all, their 

value diminished. Because the 50 percent interim results did precisely that, 

Orexigen had a duty to disclose them.”). 
212 Petition for Writ of Certiorari at i, 4–5, Hagan v. Khoja, 139 S. 

Ct. 2615 (2019) (mem.) (No. 18-1010), denying cert. to 899 F.3d 988. 
213 Id. at i. 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1071 

previously recognized a duty to update.”214 The respondents 

took a far different view, arguing that “it would be impossible 

to resolve any such [circuit] conflict because” the case did not 

involve the duty to update, but, rather, the duty to correct.215 

Respondents framed the court’s decision as a straightforward 

application of the “settled legal principle that a company has 

a duty to disclose material facts correcting a previous 

statement of historical fact when subsequently revealed facts 

make clear that the previous statement was false or 

misleading.”216 

      Essentially, the issue turned on whether the 25 percent 

interim results were “accurate” when made. If they were, as 

the petitioners argued, then the Ninth Circuit’s holding 

implicated a duty to update. If not, as the respondents argued, 

then it implicated a duty to correct. The court never explicitly 

stated whether the 25 percent interim results were accurate 

when made. Reasonable arguments could be made on both 

sides. On one hand, the Ninth Circuit described the 50 percent 

interim results as having “diminished the weight” of the 25 

percent interim results, creating a duty to share these new 

results.217 Though the Ninth Circuit never characterized its 

analysis as one implicating the duty to update, its discussion 

of Orexigen’s obligation tracks the definition of the duty to 

update adopted in this Note and in the case law previously 

reviewed.218 On the other hand, the Ninth Circuit found that 

the plaintiff “pled a plausible claim that Orexigen had a duty 

to disclose that the 25 percent interim results in the March 

2015 Form-8K [sic] were unreliable.”219 While unreliability 

implies inaccuracy, they are not necessarily 

interchangeable—as the court itself stated, the 25 percent 

interim results were still “technically accurate” at the time 

 

214 Id. at 12. The duty to update generally has not been applied to 

statements of historical fact. See supra text accompanying notes 181–182. 
215 Brief in Opposition at 12, Hagan v. Khoja, 139 S. Ct. 2615 (2019) 

(mem.) (No. 18-1010), denying cert. to 899 F.3d 988. 
216 Id. at 12–13 (collecting cases). 
217 Khoja II, 899 F.3d at 1015. 
218 See supra Sections II.C.2, III.A. 
219 Khoja II, 899 F.3d at 1010. 



  

1072 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

they were made, even after the 50 percent interim results 

were revealed.220 

      Ultimately, and unfortunately, on May 20, 2019, the 

Supreme Court left the Ninth Circuit’s decision in Khoja II in 

place when it denied Orexigen’s petition for certiorari,221 

leaving the question of whether the duty to update applies to 

historical statements with forward-looking components 

unresolved.222 The method for evaluating when subsequent 

events sufficiently diminish the value or weight of a historical 

statement remains unclear. 

IV. REVIVING THE DUTY TO UPDATE 

      The diametrically opposed analyses of the statements at 

issue in Khoja II demonstrate just one example of the 

confusion surrounding the triggering events for the duty to 

update and the difficulty of distinguishing it from the duty to 

correct. For the past thirty years, commentators have called 

for further clarity from Congress or the Supreme Court to 

rectify the conflicting case law,223 yet, other than the 

 

220 Id. at 1015. 
221 Hagan v. Khoja, 139 S. Ct. 2615 (2019) (mem.), denying cert. to 

899 F.3d 988. 
222 See Jason Halper, Kyle DeYoung & Adam Magid, 2019 Year in 

Review: Securities Litigation and Enforcement, HARV. L. SCH. F. ON CORP. 

GOVERNANCE (Feb. 20, 2020), 

https://corpgov.law.harvard.edu/2020/02/20/2019-year-in-review-securities-

litigation-and-enforcement/ [https://perma.cc/Y82S-AKD8] (suggesting that 

the Ninth Circuit’s decision is in tension with at least five other circuits, as 

it imposes a relatively unconstrained duty that, arguably, would apply any 

time “new information ‘diminishe[s]’ the ‘weight’ and ‘value’ of” prior 

information). 
223 See, e.g., Brill, supra note 8, at 677 (“The bewildering case law 

is in dire need of clarification and consistency, which will come only from 

further legislative action or a Supreme Court decision that directly 

addresses whether and when a company has a duty to update[.]”); 3C 

BLOOMENTHAL & WOLFF, supra note 9, § 18:23 (“Ultimately, the question 

whether there is a duty to update may well be resolved by the U.S. Supreme 

Court, and given the state of the current law, it should be.”); Rosenblum, 

supra note 81, at 289 (examining the “still murky” areas of the duty to 

update). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1073 

protections put in place for forward-looking statements,224 no 

such clarity has been provided. While this issue has always 

carried significant implications for the United States’ 

disclosure regime, with the unpredictable nature of the 

ongoing COVID-19 pandemic, it has become more critical than 

ever to determine whether a duty to update should have a role 

in the grand scheme of securities regulation, and if so, how it 

can best fulfill that role. 

      Since the pandemic threw the country into disarray at the 

beginning of 2020, “public companies [have] fac[ed] 

unprecedented levels of economic slowdown, restrictions on 

business operations, and restrictions on personal mobility.”225 

The SEC has responded by repeatedly emphasizing the 

importance of forward-looking disclosures. On March 25, 

2020, the CF Division issued guidance on disclosure with 

respect to COVID-19, reminding companies that the risks and 

effects that they have experienced to date, or expect to 

experience in the future, and the ways in which their 

management is responding to the evolving circumstances, 

may be material to investors and market participants.226 The 

guidance specifically advised companies “to evaluate the 

current and expected impact of COVID-19 through the eyes of 

management, and . . . proactively [to] revise and update 

disclosures as facts and circumstances change.”227 On April 8, 

2020, the SEC further recommended that companies try to 

make “[r]obust, [f]orward-[l]ooking [d]isclosures [that] [w]ill 

[b]enefit [i]nvestors” and, more broadly, promote the wider 

exchange of companies’ plans to respond to the pandemic.228 

 

224 See supra Section II.C.3. 
225 Teri O’Brien, James Shea & Melissa Garcia, SEC Provides 

Additional Disclosure Guidance for COVID-19: What Public Companies 

Have Been Disclosing and What To Expect as Q1 Draws To a Close, PAUL 

HASTINGS (Mar. 27, 2020), https://www.paulhastings.com/publications-

items/details/?id=7fbb066f-2334-6428-811c-ff00004cbded 

[https://perma.cc/KNX9-UVZR]. 
226 Div. of Corp. Fin., SEC, supra note 2. 
227 Id. 
228 Press Release, Jay Clayton, Chairman, U.S. Sec. & Exch. 

Comm’n & William Hinman, Dir., Div. of Corp. Fin., U.S. Sec. & Exch. 

Comm’n, The Importance of Disclosure – for Investors, Markets and Our 



  

1074 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

To mitigate the legal risks of such disclosures, the SEC 

encouraged companies to avail themselves of safe harbor laws, 

and also noted that it would not expect to second guess good 

faith attempts to provide appropriately framed forward-

looking information.229 Once again, on June 23, 2020, the CF 

Division issued supplemental guidance “encourage[ing] 

companies to provide disclosures that allow investors to 

evaluate the current and expected impact of COVID-19 

through the eyes of management and to proactively revise and 

update disclosures as facts and circumstances change.”230 

      Early scholarship largely advocated for the limitation of 

the duty to update as a natural outgrowth of the valid concern 

that such a duty is inconsistent with the U.S. periodic 

disclosure regime.231 Today, the duty has been so limited.232 

Ironically, the question now is whether the duty to update has 

been whittled down to the point where it is nearly non-

existent—a result wholly favorable to issuers and detrimental 

to potential plaintiffs. While a drastic event such as a global 

crisis is not the only instance in which the duty to update 

should arise, it highlights precisely why the duty is still 

valuable and should not be extinguished. Under the efficient 

 

Fight Against COVID-19 (Apr. 8, 2020) (emphasis omitted), 

https://www.sec.gov/news/public-statement/statement-clayton-hinman 

[https://perma.cc/T5X8-VFU9]. 
229 Id. 
230 Div. of Corp. Fin., SEC, Disclosure Considerations Regarding 

Operations, Liquidity, and Capital Resources: CF Disclosure Guidance: 

Topic No. 9A, U.S. SEC. & EXCH. COMM’N (June 23, 2020), 

https://www.sec.gov/corpfin/covid-19-disclosure-considerations 

[https://perma.cc/5ZAZ-FVWX]. 
231 See, e.g., Brill, supra note 8, at 634 (“In fact, ‘a duty to update 

all historical information could 

be interpreted as a continuing duty to provide daily updates of financial 

statement balances.’ Such a duty would necessitate sweeping changes to the 

periodic reporting rules and regulations that the Exchange Act 

prescribes.” (footnote omitted) (quoting John E. Hayes, III, Note, 39 U. 

KAN. L. REV. 951, 963 (1991))); Rosenblum, supra note 81, at 323–25; 

Bochner & Bukhari, supra note 136, at 235. 
232 See Mendelsohn & Brush, supra note 86, at 80 (“[A] review of 

court decisions suggests that the[] duties [to correct and to update] apply in 

limited circumstances (especially the duty to update)[.]”). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1075 

capital market hypothesis, which market players and courts 

generally assume, the price of a stock reflects all material 

public information, and therefore, any material 

misrepresentations.233 Courts have accepted the “fraud on the 

market theory,” which allows investors to satisfy the reliance 

requirement when bringing a securities fraud class action by 

assuming they relied “on the integrity of the market price.”234 

In that particular context, “it is reasonable to presume that 

most investors—knowing that they have little hope of 

outperforming the market in the long run based solely on their 

analysis of publicly available information—will rely on the 

security’s market price as an unbiased assessment of the 

security’s value in light of all public information.”235 Such 

reliance can be tainted by fraud or misrepresentation.236 

      Accordingly, when new information affects a previously 

reasonable disclosure that had moved a company’s stock price, 

it is not just the company’s investors that have the right to be 

updated, but also the stock market itself, in order to generate 

a more accurate price. If the previous disclosure is left 

untouched, then the investing public will be harmed by the 

 

233 Bell v. Ascendant Sols., Inc., 422 F.3d 307, 310 n.2 (5th Cir. 

2005) (“The central premise of the [fraud on the market] theory [of liability] 

is that, in an efficient capital market, the market price of a stock reflects all 

public information; hence an investor who purchases a stock in such a 

market is harmed if the price reflects false information as a consequence of 

a material misrepresentation.” (first citing Daniel R. Fischel, Efficient 

Capital Markets, the Crash, and the Fraud on the Market Theory, 74 

CORNELL L. REV. 907, 911 (1989); and then citing Basic Inc. v. Levinson, 485 

U.S. 224, 246 (1988)). While academic, economic, and legal debates have 

continued to question the hypothesis, “[e]ven the foremost critics of the 

efficient capital markets hypothesis acknowledge that public information 

generally affects stock prices.” Halliburton Co. v. Erica P. John Fund, 573 

U.S. 258, 272 (2014). These large-scale debates, many of which—such as the 

concern that markets may less readily assimilate public information that is 

more difficult to obtain and understand— have merit, are beyond the scope 

of this Note. 
234 Fischel, supra note 233, at 908; see also Basic, 485 U.S. at 247; 
235 Halliburton, 573 U.S. at 273 (internal quotation marks omitted) 

(quoting Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 462 

(2013)). 
236 Id. at 274. 



  

1076 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

risk of making uninformed decisions based on a stock price 

that reflects information now rendered materially 

misleading.237 As a result, the duty to update serves both the 

direct and indirect protection of investors, particularly in 

uncertain times, by informing their personal investment 

decisions and the market in which they operate. 

      To carry out these purposes while limiting frivolous 

litigation, three distinct updates to the current duty to update 

framework should be undertaken to harmonize the duty with 

the country’s periodic disclosure regime. First, the 

“fundamental change”238 analysis should be fully subsumed 

into the “remains alive”239 analysis. Pleading a duty to update 

claim should continue to be possible only when a disclosure, 

accurate when made, later allegedly becomes materially 

misleading in light of subsequent events. But determining 

what type of original disclosure is subject to the duty has 

become unnecessarily convoluted due to the development of 

these separate threshold questions. As a practical matter, it 

remains unclear how much statements relating to 

fundamental changes truly differ from statements remaining 

“alive” in the minds of investors, as the latter seem to 

encompass the former. Keeping in line with the leading 

circuits that have developed the duty to update, a duty to 

update theory should only prevail “if the previous statement 

contain[s] an ‘implicit factual representation that remained 

“alive” in the minds of investors as a continuing 

representation.’”240 Statements remaining “alive,” as 

discussed, will likely involve forward-looking disclosures, and 

thus can be shielded from liability with the appropriate safe 

harbor defenses.241 Issuers and company representatives alike 

should be responsible for taking the steps necessary to ensure 

the appropriate language is used to trigger these defenses. 

 

237 Bell, 422 F.3d at 310 n.2 (first citing Fischel, supra note 233, at 

911; and then citing Basic, 485 U.S. at 246). 
238 See supra Section III.A.2. 
239 See supra Section III.A.1. 
240 Oran v. Stafford, 226 F.3d 275, 286 (3d Cir. 2000) (quoting In re 

Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1432 (3d Cir. 1997)). 
241 See supra Section II.C.3 (discussing the safe harbors). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1077 

Given that, under current case law, the difference between a 

valid invocation of a defense and an invalid one is largely a 

matter of wording,242 the benefits of taking such precautions 

largely outweigh any additional burdens. 

      Second, if companies do not take the appropriate steps to 

shield their forward-looking statements, or if a Khoja II-

related issue regarding a “diminished” historical statement 

arises, then courts will inevitably proceed to assess 

materiality.243 Accordingly, a consistent materiality test must 

be developed. Because the “duty [to disclose] arises from the 

combination of a prior statement and a subsequent event, 

which, if not disclosed, renders the prior statement false or 

misleading, the inquiries as to duty and materiality 

coalesce.”244 Thus, although materiality is traditionally a 

question of fact, and duty is a question of law,245 courts still 

need to engage with the materiality question to some extent 

at a motion to dismiss stage. Specifically, there should be two 

materiality prongs to any test of the duty to update: (1) the 

original statement must be material, and (2) the subsequent 

information must be material. Only then should a court find 

that the latter rendered the former “materially” misleading. A 

focus on just the original statement or the additional 

information is incomplete. 

      The major question then becomes, which statements are 

material? Generally, the answer is statements upon which 

investors may reasonably rely in making their investment 

 

242 See, e.g., 15 U.S.C. §§ 77z-2(c)(1)(A)(i); 78u-5(c)(1)(A)(i) (2018) 

(giving the “meaningful cautionary statement” path to PSLRA protection). 
243 See, e.g., Khoja v. Orexigen Therapeutics (Khoja II), Inc., 899 

F.3d 988, 1012–13 (9th Cir. 2018) (discussing materiality), cert. denied, 139 

S. Ct. 2615 (2019) (mem.). 
244 Zvi Trading Corp. Emps.’ Money Purchase Pension Plan & Tr. 

v. Ross (In re Time Warner Inc. Sec. Litig.), 9 F.3d 259, 267 (2d Cir. 1993). 

Simply put, the duty to update cannot arise without a finding of materiality. 

Thus, this does not disturb the “foundational” principles that “[f]irst, not all 

material information has to be disclosed. . . . [and] [s]econd, immaterial 

information is often required to be disclosed.” Langevoort & Gulati, supra 

note 74, at 1644–45. 
245 Langevoort & Gulati, supra note 74, at 1644. 



  

1078 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

decisions.246 But, particularly in large class action suits where 

plaintiffs adequately plead that the market for the common 

stock at issue was an efficient market,247 an evaluation of 

materiality should look to whether and how the stock price of 

the company facing a duty to update claim changed. Instead 

of disregarding the efficient capital market hypothesis in 

judgments of materiality, which has led to “ad hoc 

decisionmaking,”248 the efficient capital market hypothesis 

should be utilized to help assess materiality.249 The first prong 

entails examining the stock price when the original statement 

is released. The second prong entails examining the stock 

price when the subsequently discovered information or 

changing circumstances, which a plaintiff now claims 

rendered the original statement misleading, finally surface 

(as they inevitably would in order for such litigation to arise 

at all). The burden would be on the plaintiff to show an 

appreciable effect on the price under both prongs. If there is 

 

246 See supra notes 62–65 and accompanying text. 
247 A plaintiff would be required to show that the shares were 

traded in an efficient market in order to succeed in this materiality 

assessment, similar to the fraud on the market theory of reliance in section 

10(b) securities fraud actions. See Basic Inc. v. Levinson, 485 U.S. 224, 248 

n.27 (1988). 
248 Roger J. Dennis, Materiality and the Efficient Capital Market 

Model: A Recipe for the Total Mix, 25 WM. & MARY L. REV. 373, 419 (1984) 

(emphasis omitted). 
249 Some circuit courts already require a showing that the fraud 

alleged caused a decline in the stock price at issue, particularly a decline in 

price after the disclosure of the alleged fraud. Jay W. Eisenhofer, Geoffrey 

C. Jarvis & James R. Banko, Securities Fraud, Stock Price Valuation, and 

Loss Causation: Toward a Corporate Finance-Based Theory of Loss 

Causation, 59 BUS. LAW. 1419, 1431–34 (2004) (discussing examples within 

the context of the loss causation element of a securities fraud claim). Beyond 

loss causation, considerations of the stock price have also been used to 

assess materiality. See, e.g., Oran v. Stafford, 226 F.3d 275, 282 (3d Cir. 

2000) (“Because in an efficient market ‘the concept of materiality translates 

into information that alters the price of the firm’s stock,’ if a company’s 

disclosure of information has no effect on stock prices, ‘it follows that the 

information disclosed . . . was immaterial as a matter of law.’” (quoting In 

re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1425 (3d Cir. 1997)). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1079 

an appreciable effect250 with respect to each prong,251 then a 

court could hold that the new information rendered the 

original misstatement materially misleading, warranting the 

application of the duty to update. If there is no effect at either 

or both stages, then the duty to update should not arise.252 

      For a practical application, consider the following 

hypothetical, utilizing the basic facts of Khoja II253 and 

assuming that the plaintiffs have adequately pled that the 25 

percent interim results remained “alive.” When Orexigen had 

filed the March 2015 Form 8-K that described the 

“unexpectedly positive” 25 percent interim results, 

“[s]ecurities [a]nalysts responded immediately and positively 

to the revelations about” the drug and “Orexigen’s stock[] 

surged.”254 According to the efficient capital markets 

hypothesis, the stock price reflected the new “total mix” of 

information available.255 Investors who were aware of the new 

 

250 Of course, materiality assessments are not quite so simple as a 

matter of a change in share price, and critics point out the difficulties in 

relying on share price in determining materiality. “[P]rices fluctuate 

continuously in response to a variety of issuer and market developments as 

well as ‘noise’ trading.” Jill E. Fisch, Jonah B. Gelbach & Jonathan Klick, 

The Logic and Limits of Event Studies in Securities Fraud Litigation, 96 

TEX. L. REV. 553, 555 (2018). For a comprehensive review on the use of event 

studies to determine whether a highly unusual price movement has 

occurred, see generally id. For additional scholarship on stock price 

valuation in securities fraud actions, see generally Eisenhofer et al., supra 

note 249. 
251 This would most likely look like a positive effect with respect to 

the original statement, and then a negative effect when the subsequently 

discovered information finally hit the market. 
252 Of course, like any other affirmative disclosure duty, other 

elements must also be present in addition to an issuer’s breach of a duty to 

update in order for the issuer to be held in violation of Rule 10b-5. See 

Rosenblum, supra note 81, at 298. 
253 For those facts and the shorthand terms used to describe them, 

see supra Section III.C. 
254 Khoja v. Orexigen Therapeutics, Inc. (Khoja II), 899 F.3d 988, 

995 (9th Cir. 2018), cert. denied, 139 S. Ct. 2615 (2019) (mem.). 
255 Recall that the Supreme Court has defined “materiality” as 

requiring “a substantial likelihood that the disclosure of [an] omitted fact 

would have been viewed by [a] reasonable investor as having significantly 



  

1080 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

stock price and chose to purchase shares in the company were 

relying on that “total mix” of information by way of their 

knowledge of the stock price. If the plaintiffs are able to 

adequately plead a connection between the disclosure and the 

change in the stock price, under the first prong of the duty to 

update test, the 25 percent interim results were material. 

      Just weeks later, when Orexigen discovered that the 50 

percent interim results were less favorable, the 25 percent 

interim results were “still technically accurate.”256 Once the 50 

percent interim results were finally made public, the stock 

price allegedly dropped significantly.257 If the plaintiffs are 

able to adequately plead a connection between the release of 

this information and the stock price, then, under the second 

prong of the duty to update test, the 50 percent interim results 

can be deemed material. In this hypothetical, the plaintiffs are 

able to adequately plead such a connection. By failing to 

update the public with the new results, the stock price 

continued to reflect the prior, more positive, disclosure, and 

therefore did not accurately reflect the “total mix” of 

information available. Investors continued to rely on the then-

tainted integrity of the stock price, potentially incurring harm 

as a result. As such, the 50 percent interim result rendered 

the 25 percent interim results, though accurate when first 

announced, materially misleading. 

      The final suggested change to the duty to update 

addresses what is perhaps the greatest concern surrounding 

the duty: the fear of creating a continuous disclosure regime. 

Scholars and economists have made arguments for and 

against such a regime.258 While courts will always be 

instructive with respect to the interpretation of the law, they 

are, at their core, reactive neutral arbiters, designed to be 

 

altered the ‘total mix’ of information made available.” TSC Indus. v. 

Northway, Inc., 426 U.S. 438, 449 (1976) (emphasis added). 
256 Khoja II, 899 F.3d at 1015. 
257 Id. at 1005. 
258 See Dale Arthur Oesterle, The Inexorable March Toward a 

Continuous Disclosure Requirement for Publicly Traded Companies: “Are we 

There Yet?”, 20 CARDOZO L. REV. 135, 188–94 (1998) (collecting and 

discussing such arguments). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1081 

passive and only exercise their lawmaking powers after a case 

has been brought before them.259 By contrast, regulators—

here, the SEC—are designed to enforce law proactively, 

including by monitoring activities and initiating enforcement 

proceedings.260 The SEC in particular has the power to “‘make, 

amend, or rescind’ . . . rules . . . [as] necessary to carry out the 

provisions of the law.”261 Given that much of the revived 

attention on the duty to update stems from the SEC’s calls for 

more continuous disclosures due to COVID-19, it follows that 

the SEC should step forth to clarify what, if anything, it 

means by these calls. 

      One step the SEC could take is to codify what types of 

statements qualify as “alive” in the minds of investors and, 

thus, are potentially subject to the duty to update. While 

public companies are already required to file additional 

reports in the intervening period between periodic reports to 

disclose events that are presumptively material,262 specific 

regulation of typically-material subsequent events or 

information would resolve the uncertainty surrounding when 

the duty is in play at all. Another critical step would be for the 

SEC to set guidelines for when such updates need to be made. 

To this end, the SEC could look to other jurisdictions with 

ongoing reporting regimes that “require listed entities to 

disclose information under a general obligation of materiality 

comprising price sensitive information.”263 For example, 

certain jurisdictions require the disclosure of certain material 

developments either “immediately” or on a specified periodic 

 

259 See Katharina Pistor & Chenggang Xu, Incomplete Law, 35 

N.Y.U. J. INT’L L. & POL. 931, 948 (2003). 
260 See id. at 948–49. 
261 Id. at 1001 (quoting 15 U.S.C. § 77s(a) (1997)); see also supra 

Section II.B.1. 
262 See Form 8-K, U.S. SEC. & EXCH. COMM’N, 

https://www.sec.gov/fast-answers/answersform8khtm.html 

[https://perma.cc/8L3H-HS5K] (last modified Aug. 10, 2012); INT’L ORG. OF 

SEC. COMM’NS, PRINCIPLES FOR ONGOING DISCLOSURE AND MATERIAL 

DEVELOPMENT REPORTING BY LISTED ENTITIES 7 app. at 7 (2002), 

https://www.sec.gov/about/offices/oia/oia_corpfin/princdisclos.pdf 

[https://perma.cc/U3QT-X5WN]. 
263 INT’L ORG. OF SEC. COMM’RS, supra note 262, at 7 app. at 7. 



  

1082 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

basis, while also permitting delays depending on varying 

circumstances, subject to approval by the appropriate 

regulators.264 Prescribing a clear list of triggering events for 

the duty to update and clear time frames for the disclosure of 

those triggering events would allow for a far easier 

assessment of the merits of these duty to update claims while 

also informing issuers of their obligations under the duty at 

the outset and enabling them to avoid potential litigation as a 

result. 

V. CONCLUSION 

      When a company subject to the federal securities laws has 

made a disclosure, it has chosen to speak and, pursuant to the 

duty to disclose, it must tell the whole truth in that 

disclosure.265 However, even when an original statement is 

fully accurate, subsequent events and information may arise 

that render an initial disclosure misleading. For various 

reasons, companies may be hesitant to supplement a prior 

disclosure before their next required periodic report.266 If an 

unanticipated development, ranging from a large-scale crisis 

to company-specific trial results, undermines a previous 

disclosure, corporate “representatives may fear that the new 

disclosure would call undue attention to” any errors made.267 

Instances where safe harbors cannot protect issuers, or 

reporting requirements do not already impose an obligation to 

disclose,268 create a further disincentive to tell the public the 

new truth. Courts “developed the concept[] of . . . a ‘duty to 

update’ [in order] to address” this precise scenario where “a 

 

264 See id. at 7 app. at 7–8. 
265 See supra Section II.B.2. 
266 Mendelsohn & Brush, supra note 86, at 67. 
267 Id. 
268 On some of these requirements, see id. at 70–71 (“[I]ssuers must 

file current reports on Form 8-K within four business days after a triggering 

event, in a range of circumstances that greatly expanded in the 2004 

amendments to Form 8-K. Accordingly, developments that trigger 8-K 

reporting obligations must be reported on Form 8-K even outside of 

situations where a duty to correct or a duty to update might apply.” (footnote 

omitted)). 



  

No. 2:1030] UPDATING THE DUTY TO UPDATE 1083 

company is required to revise a prior disclosure that may no 

longer be accurate in advance of the next periodic report.”269 

But, as demonstrated, the duty has been misconstrued for the 

past three decades. As a result, the duty to update has been 

restricted to the point where plaintiffs who suffered legitimate 

harms from a failure to update may not be entitled to recover 

any realistic remedies under a doctrine that was established 

to protect them. At the same time, the duty raises valid 

concerns over the burdens that issuers could face, as it risks 

transforming the already-numerous reporting requirements 

into an unsustainable, limitless obligation to disclose any 

material change in circumstance. 

      Despite the increasing difficulty in succeeding on duty to 

update claims, plaintiffs have continued to bring causes of 

action that implicate the duty in light of COVID-19.270 

Furthermore, the SEC’s informal encouragement of updating 

disclosures, and amendments it has made implicating the 

duty since the pandemic began,271 have brought the debate 

 

269 Id. at 67. 
270 See, e.g., Class Action Complaint for Violation of the Fed. Sec. L. 

at 15–16, Di Scala v. ProShares Ultra Bloomberg Crude Oil, No. 20-cv-

05865 (S.D.N.Y. dismissed Feb. 22, 2021) (mem.) (“In its March 25, 2020 

amended Registration Statement, UCO acknowledged the existence of the 

COVID-19 pandemic, but only in general terms. . . . However, the March 25, 

2020 amended Registration Statement failed to disclose that UCO’s 

investment strategy and objective had already become outdated and that 

UCO would have to change course from its traditional, passive investment 

strategy. . . . The language [in the amended Registration Statement] is a 

verbatim cut and paste from the March 6, 2020 Registration Statement, 

without any meaningful update or disclosure.”); Class Action Complaint at 

4, Arbitrage Fund v. Forescout Techs., Inc., No. 20-cv-03819 (N.D. Cal. June 

10, 2020) (“Forescout’s future SEC filings during the Class Period continued 

to mislead investors by failing to update significantly out-of-date and 

inflated projections, as well as by failing to warn investors that Advent had 

concerns regarding the Company’s recent financial performance.”). 
271 On August 26, 2020, the SEC adopted amendments to replace 

certain prescriptive disclosure requirements with principles-based rules, 

which aim to give companies greater flexibility to provide disclosures that 

are appropriately tailored to their business. See generally Modernization of 

Regulation S-K Items 101, 103, and 105, Securities Act Release No. 10,825, 

Exchange Act Release No. 89,670, 85 Fed. Reg. 63,726 (Oct. 8, 2020) (to be 

codified at 17 C.F.R. pts. 229, 239, 240); Peter Castellon et al., SEC Adopts 



  

1084 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

surrounding the duty to update back into the spotlight. For 

these reasons, the suggestions set forth in this Note seek to 

clarify the duty to update while preventing it from 

overshadowing the periodic regime underlying U.S. securities 

regulation. In particular, both courts and the SEC have 

important roles to play if the duty, as argued, continues to 

exist. By setting parameters for when the duty may arise, the 

legal standards under which the duty should be assessed, and 

how issuers may comply with their obligations to update, the 

approach adopted here will minimize frivolous litigation, 

remedy the conflation of the duty to correct and the duty to 

update, and impose liability only in cases where disclosure’s 

purposes can truly be advanced. 

 

a More Principles-Based Approach to Public Company Disclosure 

Requirements, NAT’L. L. REV. (Sept. 1, 2020), 

https://www.natlawreview.com/article/sec-adopts-more-principles-based-

approach-to-public-company-disclosure-requirements 

[https://perma.cc/98KA-ABN4]. One amendment in particular, the 

requirement that material changes to a registrant’s previously disclosed 

business strategy be disclosed, may implicate notions of the duty to update, 

but the SEC did not provide any definition of “business strategy” nor any 

set timeframes for disclosure of these material changes. See Modernization 

of Regulation S-K Items 101, 103, and 105, 85 Fed. Reg. at 63,732.