Cluett, Peabody & Co. v. LHLC Corp.

How later courts describe this case

• holding it was error for trial court to refuse to consider context in evaluating securities fraud claim
• continuing duty to disclose obtains when “subsequent events” make earlier statements inaccurate, or when those statements are “later discovered” to have been false or misleading from the outset
• test for determining adequacy of disclosure is whether disclosure is materially false and misleading as a whole
• “Neither the presence of the defendant in the state, nor actual contract formation need take place in the forum state for defendant to do business in that state.”
• Fifth Circuit ruled that “courts interpreting the securities laws have long recognized that reviewing the context in which disclosure appears is an essential part of determining the disclosure’s adequacy”
• “When the problem consists in keeping silence while the primary violator carries out the fraud, the plaintiff must show that the silent person had a legal duty to speak.”
• contacts .with plaintiff relating entirely to plaintiffs request for certification as a Diplómate of the American Board of Endodontics held to be the transaction of business for purposes of exercising jurisdiction over the defendant board
• contacts with plaintiff relating entirely to plaintiffs request for certification as a Dip-lómate of the American Board of Endodon-tics held to be the transaction of business for purposes of exercising jurisdiction over the defendant Board