The Leidos Mixup and the Misunderstood Duty to Disclose in Securities Law

48 Pages Posted: 6 Jul 2017 Last revised: 26 Sep 2017

See all articles by Matthew C. Turk

Matthew C. Turk

Indiana University - Kelley School of Business

Karen E. Woody

Washington & Lee University School of Law

Date Written: July 4, 2017


This article concerns an upcoming Supreme Court case, Leidos, Inc. v. Indiana Public Retirement System (Leidos), and examines the broader issues that it raises for securities law. The consensus among scholars and practitioners is that Leidos presents a direct conflict among the circuit courts over a core question of securities law—when a failure to comply with the SEC’s disclosure requirements can constitute fraud under Rule 10b-5. This article provides a much different interpretation of the case. It begins by demonstrating that the circuit split which is presumed to have brought Leidos to the Supreme Court does not in fact exist. It then shows that, rather than being riddled with disagreement, the leading judicial analysis in this area of the law instead reflects a shared set of misconceptions about how the securities regulation architecture works.

By unraveling the underlying sources of the Leidos mixup, this article makes three contributions. First, it identifies overlooked aspects of the disclosure rules at issue in Leidos, and provides a novel analysis of how the case should (and likely will) be decided. Second, it explains how errors in leading interpretations of the legal authorities implicated in Leidos carry over to other prominent portions of the regulatory framework, namely Sections 11 and 12 of the 1933 Securities Act. Third, it demonstrates that a central yet ill-defined securities doctrine—the duty to disclose—functions primarily to obscure rather than clarify the legal questions at issue in disclosure fraud claims. Taken together, these points suggest that Leidos is a more unusual case than has been appreciated, and stands at a remarkable confluence of legal and scholarly confusions, many of which implicate fundamental principles of securities law.

Keywords: securities law, financial regulation, U.S. Supreme Court

Suggested Citation

Turk, Matthew C. and Woody, Karen E., The Leidos Mixup and the Misunderstood Duty to Disclose in Securities Law (July 4, 2017). Washington and Lee Law Review, Forthcoming, Kelley School of Business Research Paper No. 2017-44, Available at SSRN: or

Matthew C. Turk (Contact Author)

Indiana University - Kelley School of Business ( email )

1309 E. 10th Street
Rm. HH4080
Bloomington, IA 47405
United States

Karen E. Woody

Washington & Lee University School of Law ( email )

Lexington, VA 24450
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics