InMatrixx Initiatives V

question 68

Multiple Choice

InMatrixx Initiatives v.Siracusano case referenced in the text,the U.S.Supreme Court analyzed the question of whether an issuer must disclose known information about possible side effects of a drug that could affect the drug's stock price even though no proven statistical link exists between use of the drug and the adverse effect.The Court held:

• A) that a bright-line test would be applied requiring at least one civil judgment in favor of a plaintiff before a defendant would be required to disclose allegations of a link between a drug and an adverse effect and that the defendants were entitled to dismissal of the case because no showing of a civil judgment had been introduced.
• B) that no statistical link between the use of the drug and adverse effects was required but that the defendants were entitled to dismissal of the case because the plaintiffs did not personally suffer adverse health effects from the drug.
• C) that the defendants were entitled to dismissal of the case because the plaintiffs could not prove a statistical link between use of the drug and adverse effects.
• D) that the "total mix of information" test applied in regard to the issue of materiality, that statistical proof was unnecessary, and that sufficient evidence existed for the plaintiffs to proceed to trial.

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Definitions:

Externality

A consequence of an economic activity experienced by unrelated third parties; it can be either positive or negative.

Basic Research

Investigative study focused on gaining more comprehensive knowledge or understanding of the fundamental aspects of phenomena without targeted applications towards processes or products in mind.

Congested Nontoll Road

A road that experiences high traffic levels leading to delays, without charging fees for use.

Rival In Consumption

Describes a type of good where one person's consumption prevents or decreases another's ability to consume the same good.