The Court’s Take on “Material Omissions”
Not only did Cardone allegedly make knowingly false claims, but he also failed to disclose that the SEC required him to remove those very claims. The Ninth Circuit decisively states:
“Pino sufficiently alleges that Cardone’s failure to disclose the SEC letter (which requested that Cardone remove the projected rates of return and distributions) supports an omission claim under Omnicare… By its nature, a misleading omission suggests that a contrary fact could exist and may have been disclosed elsewhere, but not as part of the statement in question. Indeed, ‘that truthful information is available elsewhere does not relieve a defendant from liability for misrepresentations in a given filing or statement.’”
(See p. 14, citing Miller, 519 F.3d at 887 n.2)
The kicker? The court held that even if this SEC letter was publicly available, “constructive knowledge does not bar recovery for § 12 claims”—meaning ordinary investors don’t lose their rights simply because the information was buried in regulatory databases or available somewhere online.
