Misleading Omissions: Securities and Opioids

I just posted a new paper to SSRN.

The 2015 opinion of the United States Supreme Court in Omnicare, a securities case, and other high-stakes litigation surrounding misleading omissions have raised the stakes of better understanding what makes a statement misleading by omission. Bayes’ Theorem is a useful structure, especially in the context of opinions, for better understanding otherwise-loose concepts like “partial or ambiguous statement,” “half of the truth,” “mistaken knowledge,” and facts “that rebut the recipient’s predictable inference.”

The Bayesian framework has straightforward application to securities cases like that that at issue in Omnicare. The framework extends to other commercial cases as well, and to cases of consumer fraud and similar claims. In addition to a scenario explored in Omnicare, I illustrate the framework with an application to the misrepresentation of the addictive nature of a product, with reference to recent opioid litigation and potentially misleading omissions about addictiveness.