like other provisions of the federal securities laws section eleven of the securities act imposes liability only for untrue or misleading statements of material fact the only facts conveyed by a statement of opinion or belief is the fact that the speaker held the stated belief as this court concluded in virginia bank shares versus stand for a statement of opinion a belief can therefore be actionable only if the speaker did not actually hold the stated belief in the decision under review the sixth circuit alone among the courts of appeals concluded that this court's reasoning in virginia bank shares did not apply to a claim under section eleven even though section eleven contains a materially identical falsity requirement to the provision at issue there prospectus that we have three point five million units of inventory in our secret inventory warehouse so they can't you know turns out they have none that's all right they're still protected i think that that would probably be a statement of opinion but it is much closer to the wire between statements of opinion and statements of fact really it's an open question if they say it's a very precise number for something that they know anything about and it's of opinion which we think is a useful guide includes not just statements on matters of judgment like the statements we have at issue here but also statements that express uncertainty about factual matters and i think in your hypothetical mr chief justice you could view that statement as being the equivalent of a factual statement that along the lines of we have approximately three million units or widgets in our inventory such that if they had no where near that that statement would be an objective way false statement suppose it is actually disputed an expert expert a museum expert on archaeological mission says it is my opinion that those bones in that mountain are the but there are some things implied if you learned later he did in a bar all night and had never even seen or heard one word about what the bones were like wouldn't you think he had issued a misrepresentation so just as prior first that would clearly be a statement of opinion because this statement on a matter of judge yes i view is that where the speaker does not say anything about the basis for its opinion the only fact that is being conveyed is the fact the speaker's belief yes and i do know produced an example because i knew that was your view and what i would look for was an example where your view doesn't seem quite so reasonable and that was what i said it doesn't seem reasonable there because i think any listener would think that the archaeologist had is right so now we're getting so not withstanding the fact that everything does this prior there is no implied statement of fact there may nevertheless be a claim and that is for the simple reason implied statement i think the implied statement is that is done some work to figure this out well and i think that we may end up ultimately getting to the same place because i mean explain how we think the analysis would work in the situation in a situation like that we believe that the ultimate legal inquiry is whether the speaker did not possess the stated belief that a plaintiff would be able to come forward with allegations in your hypothetical that the archaeologist spent the evening in the bar that the archaeologist had no basis for his or her opinion and in that circumstance that would be circumstantial evidence that the speaker in fact did not  true regardless of whether or not it appears in a registration statement because after all in section eleven while congress certainly imposed a heightened obligation on the issuers and did so by relaxing other elements of liability congress included exactly the same element as it did in a variety of other provisions of the federal securities law laws but again our view is that for purposes of pleading a claim a plaintiff is not restricted to smoking gun evidence that the speaker did not possess the state  belief and so again if a plaintiff is able to come forward with allegations that fosse the pleading fresh hold a possibility to suggest that the speaker infected not hold the stated belief that one fact be sufficient that may be true but you deny the fact that there can be situations in which a person makes a sin makes a statement of belief and believes that to be true but lacks a reasonable basis for stating a belief there is a difference between those two situations and i think there is a difference between those two situations and i think this illustrates an important conceptual distinction i think in a case where a speaker has no basis whatsoever for the stated belief there will be comparatively few cases and i'm certainly not aware of any case from the reported cases in this area where the speaker held the stated belief but lack any basis for it whatsoever however i think that the government's reasonable basis standard the position of the solicitor general here suggests i think something more and quite frankly it's not entirely clear how much more that position would require it seems to focus on how the speaker actually arrived at its opinion and that suggests that the focus may be on the diligence  conducts but i view is that once you start getting into a lack of a reasonable if you're really getting into a matter of opinion and i really do think that however the government has operates in practice and again i think the government's brief brush wrong with that there's  issuers others to have some sort of reasonable basis i'm borrowing the government's words before it goes about making predictive even predictive statement so two points in response to that just all at the risk of being glib we simply don't think that that is the statute that congress and acted and certainly if congress had wanted to impose an obligation on issuers of essentially providing an implied warranty for any statement of opinion that issuers make in their registration statements you could have done so and there are other statutes that impose liability where there is an absence of a reasonable basis let me explain why it's problematic as a matter of policy we believe that a reasonable basis standard that is to say a standard that goes further than the standard that i think justice pryor was suggesting it goes beyond simply saying that you have to have some basis but that looks it reasonable to us if the basis opens up issuers to after the fact second guessing on matters what about a factual basis sorry factual basis there has to be a factual basis for making well again i think there's a meaningful difference i think in your hypothetical what i would not work is the standard you're worried about the standard reasonableness is too open to speculation ok what about just saying there has to be a factual basis well as a practical matter i think that where you have no factual basis whatsoever and where a plaintiff is able to sew a wedge that will be sufficient to allow the plaintiff to go forward barring any other case where the speaker has no factual i don't say no state say don't say no you're leave it up to the judge or the or the depending the fact finder say is there a factual basis and just his opinion is something it depends on context whether something is an opinion so factual basis in support we'll have to do some extent depends on context and as a practical matter justice prior i really do think that our we call standard takes care of that situation because in a situation whe a factual basis and a reasonable factual basis i mean if we adopted a factual basis well would we accept a reasonable thing well i think that really depends on what the reasonable but i mean i think it's just the same rule in disguise really well i think that in the context of legal compliance of statements of the sort that we have an issue here i think that that context in many ways illustrates the potential difference so  suppose you had an issue or who had two separate legal opinions one suggesting that a particular practice was legal and the other one was not certainly there i think you would say that the issue or has at least some basis but it may be open to after the fact something like that but but and so your point is a good point that it isn't so easy to figure this out exactly what the standard is no alternative of course is to issue registration statements that have statements in them of two very detailed very fact base and where people would think some work was being done and in fact far less work has been done than anybody would think was plausible and they just float right by without attack now isn't the law designed to catch those things well i would say this just as prior i mean again the statute itself does not contain any reasonable basis requirement and nothing in this court's decision in virginia  as accurate yes and justice ginsburg that's a statement of page ten ninety three of the court's opinion in virginia bank shares and we think that in context that statement stands for the proposition that i've been articulating this morning namely that where a speaker makes a statement of opinion and has no basis for that statement that may be relevant in showing disbelief that may be relevant in showing what the court went on to say was legally required namely both subjective disbelief and objective fal before the six circuits opinion in this case that was the consistent understanding of florida courts in construing this court's opinion in virginia bank shares and so we certainly think that virginia bank shares does not stand for the proposition that an issue or or makes a statement of opinion somehow includes in that statement an implied warranty that the speaker has a reasonable basis for that if we adopt your position which i take it to be that lack  if you adopt our view that the legal standard here turns on subjective disbelief which again we believe was the holding of this court in virginia bank shares in the plaintiff's here are foreclose because the plaintiffs disclaimed any allegation based of the complaint that we think are relevant here the first is paragraph one seventy eight which is the paragraph in which the plaintiffs disclaimed any allegation for a lying on fraud or intentional misconduct and we think that under our we go standard that  close as plaintiffs in this case going forward i would note that plaintiffs don't really dispute that under our we go standard their claim is foreclose they make no effort in their brief to suggest that their claim could nevertheless go for now if this court were to adopt the solicitor general's legal standard to say that the legal standard here is whether or not there was a reasonable basis for the opinion this court would obviously have to vacate and remain on because that was not the legal standard that the sixth circuit applied we think that we would have a very strong argument that we should nevertheless prevail because the plaintiffs in this case have pointed only to the conclusory allegation you identify justice ginsburg and that is the allegation in paragraph one eighty three that says that none of the defendants had a reasonable grounds to believe in the statements in the registration statement if the inquiry in this case focuses on how the speaker arrived at its opinion this complaint is really threadbare in terms of allegations that relate to that issue and so behalf of the issuer or would everyone else who is required by law to sign the registration statement so i think that the inquiry would be much the same as the inquiry with regard to claims that have a c enter requirement such as claims under section ten i would note that there is a little bit of disagreement in the lower courts about how broad the category of individuals at an issue or a state of mind is relevant but the inquiry generally focuses on those who either made or approved the statement at issue can suppose that in a particular registration statement there was a statement that said a particular kind of transaction was full right and the person who makes that statement whoever it is really believes it but in fact that person knows that the government is breathing down his neck that the government seems to have a different view that person knows that its competitors have a different view and that person  also consulted three lawyers and two of them have given a different view but he still believes what he believes he believes that the supreme court is going to vindicate his legal position but the only thing he says is i think this is lawful  why isn't that something where there is an omission that makes the statements misleading so we don't think that there is an omission under that circumstance because we think that the only fact that is being disclosed by the state is the fact of the speaker's belief and if you look at the relevant language on which respondents and the government really focus it is that way in which concerning missions it's not all language concerning falsity and that one which says focuses time and time again on the fact it issues so it refers to missions a mission to state a material fact and so what is omitted has to be a fact necessary to make the statements they're in and i think that's a reference statements of material fact well just said statements there when it doesn't actually say statements of material fact or not i think that's most naturally a reference back to the language a couple of points earlier about statements of material fact i think this all just underscores the fact that congress in this provision did not impose an a for a broader formative dude to speak nor did it impose liability on untrue or even meant it didn't impose an obligation to speak but once you speak it said that it you can't make commissions that make your speak yours your statements misleading and i guess what i'm saying is you know what i've given you is a case where this is a judgment call why do you think something is legal or not but would you know when app girl you're in the position to know when or your readers are not in a position to know what you know is that the government seems to disagree that your competitors seem to disagree and that most of the lawyers seem to disagree and still you're going to put this in your statement and say oh no problem that's not misleading well and in your hypothetical justice kagan i think it's either two points i would make about it the first is that again the fact that is being conveyed is the fact that the speaker's belief  that is what makes the statement material which is to say that when you have statements of opinion in a registration statement the reason that they are material is precisely because it is management's view on a particular question and so when you have a  friday fat is the fact that has to be shown to be either false or misleading obviously if the speaker does not possess the stated opinion the statement is false but we don't need think that a reasonable reader would look at that statement and say things actually both he's done something to try to check as to whether the transaction is legal and he doesn't know anything that's very dispositive going the other way and both of those things i mean could  be false i think where a speaker says nothing about the basis for the opinion there are obviously a spectrum of potential bases for the opinion that the speaker could have and so again we don't think that there is any necessary implication about the scope of the basis for the opinion now again if it's a case where the speaker truly has no basis for the opinion we believe it will be quite possible for a plaintive to include all these underlying allegations about the basis as a way of showing subjective disbelief and so what i really wish you well we would respectfully submit is the hypothetical situation in which a speaker in the face of overwhelming contrary evidence in no basis nevertheless it hears to a genuine belief in the question of whether or not liability should by in those circumstances and i view is simply that it is not worth the candle to frame the legal standard in a way as to cover that entirely hypothetical situation and in part to get back to just the sort of my worst question from the beginning of the argument that is because it is important to underscore the fact that this is a statute that imposes strict liability and as this court explained in printer versus ball when it comes to statutes tha impose strict liability issue is really need to have certainty and predictability and a legal standard that focuses on reasonable basis is going to open up the issue worst after the fact second guessing by tours about whether or not a particular basis is reasonable but i  mr shand again that the fact that the statute has is a strict liability statute might cut the other way that why is it a strict liability statute because congress had some understanding number one that it was the issuer who knows the facts not the readers and number two that it's awfully hard to show subjective intent well congress dealt with the context of registration statements precisely by relaxing the other elements of liability that of course exist under other provisions of the securit and what that leaves us with is a statute where this falsity element is really the entire bargain because elements such as reliance and loss causation are no longer affirmative elements of liability and of course what that means is not only that it is easier for plain ultimately to prove liability but that it is also easier for plaintiffs to plead a claim under this provision and i do think that a recent basis standard depending on how that standard is framed could make unfairly difficult for issuers to avoid liability at the pleading stage and is of course this court has recognized in the securities context obtaining resolution of these claims on a dispositive motion is often as a practical matter the only way in which defendants going to avoid liability because of the pressures of settlement in cases of this variety once the court has any further questions all reserve the balance of my time thank you counsel mr chief justice may it please the court the difficult part of this case for the other side is that we all know that opinions and virginia bank shares makes this point frequently imply facts the difficult part of this case for our side and it's important  you confront the hard part of the case is that sometimes you just state opinions are just statements of belief and what you have to figure out i think is a what is the default rule that you should be looking at a registration statement for and b what is that issue or can do to make it clear no look this is just our sense of the matter they didn't write the registration statement in a bar one night a registration statement is a very solemn document and you know that from a variety of things the first is as justice kagan points out it is a strict liability document unlike the great majority of the provisions of the securities laws congress said we don't have to prove scienter congress said that reliance doesn't matter congress said that causation is for the other side to prove we know that when congress wrote that statute it had opinions in mind because section eleven refers to opinions there are other the pinions and with respect to an audit opinion the auditor has to prove that he or she had engaged in due diligence we know that it had forward looking statements in mind which are opinions because it said that the road looking statements the that are subject to section that are subject to the exemption it is the plaintiff that has to prove that they actually knew that the ford looking statement was false the sixth circuit held that once a false statement has been made a defendant's knowledge is not relevant to a strict liability claim was that correct  is true with respect to the factual representations that are expressed or implied the sixth circuit was not confronting i think an important part of the case because the petitioners had not made the argument what do we do if the opinion is head just what do we do if instead of just a representation that here is our opinion which carries with it the implication about a certain set of facts we instead say we are uncertain and i think that's an important issue that isn't before you either but with respect it is a strict liability statute if the factual representations that are expressed or implied are incorrect then they are liable and the reason for that is that this is not a securities fraud so that's the holding of the six circuit we were at a minimum have an obligation to vacate in remained as they didn't hold that the reasonable basis standard was satisfied here when you run up the judge as a purely technical matter i think that's not correct we don't i don't particularly care what the last word in your opinion is what the six circuit did is it remanded to the district court if you refine the rule for applying for applying section eleven i think in the statement of opinion is actionable alternately found to be falls so that i don't think is what you're arguing with the u s g is arguing the point is that the statement that it is my opinion that out of the warehouse  holed up in a ninety three mile an hour wind and poor seventeen hours as long as the windows are closed and there that statement maybe falls but it may also be  true that the issuer before issuing the statement performed a variety of tests in which case you would agree i think that it is not actionable and so so it isn't it's that it's false it's that there was no reasonable basis for holding it moreover whether the issuer has a reasonable basis is a fact about the issue or state of mind it isn't but that there is a reasonable basis in the world it is about whether those people who issued this statement had a reasonable basis for issuing it or not i think that's about their state of mind in a sense but those two things i think do require a reversal well your honor first of all you have described what the government has articulated is the rule that is the reasonable basis standard we endorse that test we have a still broader argument that we would win on even if you did it we would win the case even if you disagreed with it and that is this is a strict liability statute if it turns out that the implied factual representation or indeed the express factual representation that is that the building will hold up turns out to be wrong and the building will fall down even though they did their very best to figure it out this is the hard case and that is they tried really hard to figure out about the building they had a structural engineer take a look at it on our broader reading of the stan chewed section levon changes and assigns the risk of error to them so right ari that doesn't that doesn't make much sense to a statement is made truly or falsely at the time it's me yes so how can you rely on evidence of what happened later we would never have closure on a security section if we would rise solely on the fact that the building fell down ten fair fair enough and that is that just aspires hypothetical happened to be about what would happen in the future and that the you know looking station well it should i give you a hypothetical that i think will avoid your problem but still raises the hard case for us and that is we have a million dollars in inventory today on the day of the registration statement so the following in our view we have a million dollars in the majority it's an opinion it's describing what happens today we know under section eleven which talks about the date the registration statement becomes effective that if the warehouse burns down a week later they're not responsible but what about the case in which the day before the registration statement is issued the warehouse burned down and they had no way of knowing it was in rural india their very best efforts wouldn't have disclosed it under section eleven they're responsible with what section eleven died i don't see how that could be they said in our opinion we have x amount of  starting out by saying well it is an opinion but in the pinion carries the implication that they would have some basis for and they didn't have a basis for it in fact they had a reasonable basis so how how they're going the  plaintiff recover this is a problem that the common law confronted and it's addressed in the restatement first of contracts and of torts in four seventy four of the restatement of contracts and in five forty two of the statement of torts and it says if you get an opinion if your expert archaeologist or if an art appraiser says this is a picasso you are allowed to rely on the truth of the assertion the reason they say in our opinion is not to express a doubt if you go back and look at the transcript chairman again will have said we believe we think or in our view twenty times in the first twenty minutes of this real argument he wasn't intending to express a doubt he was trying to say look i have looked at this problem here is our view of the situation is people who are especially involved sometimes opinions are to evoke certainty not uncertainty give me those times were about the other time ok and that's i think the point is you have to decide which of those things is present in a registration statement and two things the first is we do believe in the reasonable basis standard that is the government has a more modest what you could call a middle ground we endorse it we have a more expansive reading of the statute as well so that's point one point two is we do think absolutely that you can have an opinion in a registration statement that makes clear it is not something in which you should rely on for the ultimate truth and you could look at some of the state isn't that exactly what you have here because if you look at these registration statements you know we have been looking it one or two sentences in a vacuum but in fact if you look at their registration statements themselves they're sort of surrounded by reasons to discount the opinion that says you know c m s the government might think differently and if that so we're really in bad shape it says these laws may be interpreted in the future in a manner inconsistent with our interpretation i mean it seems to me that they actually did a pretty good job of saying look we think this but there are there are some problems with this and it could go the other way i think this is a really important point i think the critical thing is to realize that mr shami and doesn't his view is even if there are no qualifications whatsoever it is only telling you what is in his client's head so that's point one and they did not make this argument in the district were liquid appeals here that you have to look at the full context of the opinion and see whether the parties actually fully had now point to is that there are statements that we are relying on our complaint that are like that if i could take you to the joint appendix to give you one good example and i'll take you to page one ninety two and this is our allegation about their puta interchange we are glad they  settled a bunch of cases including with the government over whether they were switching their patients to drugs in order to have an arrangement that was more profitable to them but not good for the patient and we allege that their particular changes implemented by them was illegal here is what they said at the top of one ninety two when required endorsed specifically requested by the physician or patient branded drugs are dispensed and generic drugs are substituted in accordance with the political state and federal laws as requested by the physician or resident so this is an instance in the registration statement where they didn't have any of that hedging they simply said we were acting legally and our point is that either of two things implied by that one is that it's legal were at least that no person that a person would reasonably conclude that it's legal but we want to do one of the manned is the following we want to show the actual facts and we want to show that a person would not reasonably conclude this activity was legal to the extent they have hedged in the registration statement and said look here's a big law and we know they're a big loss out there we know there are big regulations and if the registration statement is read to say look you could read it as a as b or c then we're going to have to prove that the facts are inconsistent with a b or c that is to say on the government's intermediate view that the actual facts don't comport with a reasonable reading of the statutes and regulations that are involved remember that it is very hard to understand why congress would have written a statute that says you are going to be strictly liable for misrepresentations and we're going to ignore the fact that the reason you state opinions in your registration statement is precisely so that people will rely on them the whole point of having these in the registration statement is to persuade people about the state of the company about the state of what it's doing about its profitability and the like and if you announce a legal rule that says we're going to songs you put the words we believe in front of any of those sentences then what you're going to have is a situation in which every single time when the basis of your argument in the text is not the untrue statement of material facts language right because i would take it that you agree with the government and with mr shand macam that is to that the only untrue statement in an opinion is whether you hold at the basis of your view both as to green with the government and also suggesting that a further view is the omissions slant which is that right that is not quite correct i think that it's a very subtle difference to say is what we're holding them liable for the implied statement which was untrue or the omission of the fact that makes it non misleading i'll tell you let me give you what virginia bank shares said about this it spoke in this  is in the context of we're fourteen a nine which uses the same language as section eleven and this is on page ten ninety two such statements are factual in two sentences as statements that the directors do act for the reasons given were he belief stated end as statements about the subject matter of the reason or belief expressed in that example the court understood the statement we've you know we recommend this merger because forty two dollars is a high price to be an implied statement about the nature of the price and whether it was high it were fair i don't think much matters in the characterization characterization of whether it's an implied statement or instead the failure to include a fact that would make it true but that's how virgin your banks will there in the case of it you have banks is a given it was stipulated or proven already by the true verdict the total believe what they said and i think that's a really important thing about virginia bank shares i think the most that my friend can try and derive from virginia bank shares is that under section fourteen in nine the court said you can hold someone liable if you have both subjective and objective disbelief what they're trying to do is to say that that is not just sufficient but necessary and that you bank shares stands for the proposition that you have to prove subjective disbelief and let me just point to the language of the court's opinion that i think is completely inconsistent with that this is going to be on page ten ninety five of the court's opinion the first sentence is going to be from precisely before what mr shami again read under section fourteen a then a plaintiff is permitted to prove a specific statement of reason knowingly false or misleadingly incomplete even when stated in conclusory terms and that is referring to the following statement that however conclusory the direct their statements may have ben then it was open to attack by god provided evidence allowing respondents the opportunity the recovery on the allegation that it was misleading to call forty two dollars high and the clerk said you could recover just on that allegation and remember how anomalous it would be to say that virginia bank shares hold you must prove the state of mind of the speaker this is a strict liability statute to say you have to prove that the person didn't believe the implied fact is to say it's not a strict liability statute it's essentially scienter and why is it we would ask the congress would say we recognize an implied statement in the opinion but we're going to require that you prove that they essentially intentionally lied to you it's just contrary to the entire structure and noachian of section eleven which isn't a fraud statute at all you do strive from principles of common law that said if you have a even negligent misrepresentation even an innocent misrepresentation you just state the facts wrong then what you have is effectively rescission and that is the issue or got the money from the person who bought the stock there was a mistake it went wrong we're not saying that there intentional liars but they got the money on the basis of an incorrect representation they get the money back and you can't say but you have a state of mind requirement when the statute simultaneously says for what does that mean mr sherman can says that's very open ended and i think he has a point i don't really know what a reasonable basis would be in that situation this is something that the common law has employed and utilized for well over one hundred years in this case we would required to prove with respect to the hedged legal statements that a reasonable for our that the legal view of the company is consistent with the facts and that is you couldn't reasonably hold this legal view if you were taking kick someplace in the company if you are making if you go out of your way to say what we're doing is legal then you are going to have to undertake a reasonable investigation i'm not let me just say to you what i have seen it and i believe it's i believe the c e o says i believe that nobody in this company is paying bribes and the c e o is no one from it it's a true statement of belief and he's received information from certain corporate compliance officers that no bribes are being paid most specific thing that i can help you with your opinion in the case is that remember this is due diligence standard exists in the statute any expert that offers an opinion is going to have to show a reasonable investigation congress didn't write more into the statute for the defense because it's very can text will if the c e o knew that there had been claims in the press for example there had been allegations they were facing key tam lawsuit then there would be a heightened obligation to investigate my point for you is that mr shand again thinks none of that's relevant and that i understand that he says it's purely subjective you say basically it's the state of mind is completely irrelevant but if we're in the middle someplace right in the middle ground is that when he makes that statement in the registration statement he is trying to induce me to believe at the very least i wouldn't say this if i didn't have a reasonable basis we then will have to prove as the plaintiffs that there was not a reasonable set of facts that could lead them to say this in his view even if it was completely unreasonable that is to say the c e o heard these rumors and you are not really helping me but maybe all you're saying is reasonable reasonable reasonable i would like some more concrete guidance as to what is reasonable i'm sorry it's just very context dependent in your hypothetical what i would say is that if the c e o knows that there's never been an allegation about this his general counsel has said we are complying with the law i don't think the c e o is going to have to do more but in fact if the contracts by their terms which is what we allege involved direct payments for increasing market share if they are paying yours another good example we have in the complaint that their own lawyers told them not to make these purchases with respect to nursing homes because it would amount to an of our employees are not giving bribes if that is true across the company because it's not just the c e o that signs the registration statement then yes thank you harshly mr chief justice and may it please the court the parties of opportunity to extreme positions and we think that the answer lies in the middle and this is an answer that comes right from the language of the statute because it's not the case as petitioner suggests that the statute only requires that you make statements that are literally accurate the statute says that you have to make statements that are both literally accurate and not misleading as to that there cannot be a material omission and this is a this is really a standard that makes sense in the context of this particular case we're talking about whether something in a registration statement has a reasonable basis and i want to clarify what we mean by reasonable basis we need a basis that would be expected under the circumstances that a lack of a reasonable basis is what makes in omitted fact make the statement about the opinion misleading so to answer justice alito is question a plant that has the burden to come into court and provide an admitted fact that should have been put in this statement of opinion or provided along with it in order to make it not misleading we think that you could establish liability either way it's really the court of appeals kind of address two questions and we agree with the court of appeals halfway the first question is do you always have to have subjective disbelief to recover under section eleven for an opinion the court of appeals correctly said the answer to that fact that's not true meaning you need to prove the falsity of the objective fact with respect we don't think that the court in virginia bank shares held that both were required because oh you're right the only way to get your second was require so we always have to prove that so what mental state are you saying has to be proven either they didn't believe what they were saying and there was no reasonable were right there was no reasonable basis for what they were saying that's right either they didn't believe what they were saying or there was no reasonable basis for what they were saying  and justice kennedy as you said was right or wrong and you got the part out about it being right no way in which is why the six circuit decision was wrong is because it suggested this idea of liability by hindsight that if there's something that you give an opinion on about legality and it's later proven or later it's later established to be untrue by a court that you could be found liable by hindsight if we think that that's not true what matters is the state of mind on the basis that you had at the time the registration statements were made and that's actually directly in the language of the text of the statute which focuses on when the registration statement became effective but just to make clear and again in response to justice alito is question this is a context specific inquiry and the burden is on the plaintiff to come forward with an admitted material fact that should have been stated in the context of an opinion the kinds of things that would be omitted material facts that would matter i think that undercut a basis that you would expect so it could be a lack of any investigation whatsoever but it could be as justice kagan said that you've been sued and several courts have held against you those are the this is always going to come up after it's been shown that the statement turned out the statement of belief turned out to be in correct the registration statement says we believe x turns out x is not true so it's not to be very hard in that for a plaintiff to allege that the that the issuer did not make a reasonable investigation because if they were if they had done a reasonable investigation they would have discovered that x wasn't true well with respect i'm not sure that's true because of the stringent pleading standards that are in place first of all it's not just that they could a legit conclusion under this court's decision in ballots and you have to have facts to support it also there are some courts like the court in this case depending on the allegations and say they need to meet the particular the standard for fried claims that sound fraud under section nine b so there is in fact a burden on the plaintiffs and one point that i want to make is that this is the kind of inquiry that comes up in all missions cases all the time the question is the plaintiff says and asked to say with facts behind it there is something that was omitted that batters and the question ultimately for the finder of fact to decide is it is make the statement misleading or not and that is a very context pacific discussion where they say they put someone pleads that they said we believe there were no bribes paid and then later it's discovered that be i again i think it depends on the case you know one thing that i would suggest to the court by way of reassurance is both of the court has addressed a number of omissions cases and asking you know is the kind of information something that should have been included to make the statement not misleading but also that the standard that we're talking about the lack of a basis has deep roots in the common law it's been a longstanding position of the f c c and there are numerous courts that have used this standard including the third circuit's decision in the trunk casey and i think it's cited in our brief do you think that there are specific omissions case well the case wasn't really pleaded the way that we conceive of it in terms of the locker a reasonable basis so we do think the appropriate thing for the court to do would be to provide appropriate instructions to the lower courts send this case back and potentially allow this case to be repeated because of the fact that we do think there was a kernel of this lack of a reasonable basis idea in two places in the complaint in this case the one is the relatively conclusory statement in section one eighty three of the complaint that there was not a reasonable basis but then there was also as mr go n noted paragraphs eighty nine and ninety of the complaint which were specific facts that were alleged about the company's attorney saying with respect to one of the specific contracts this contract has all the marks of a kickback and a legal kickback and that is the kind of thing that potentially is an omission that could be material and could make the other statements in the registration statement misleading if you don't provide such information you think the twelve billion this in this context requires the plaintiff to allege what kind of investigation was conducted before those discovery i think that would be a case specific determination but i don't think that under the plaintiffs could just come in and give a very generic a very concludes reallocation that's what the court said is no conclusory allegations but another another point i think that might be helpful to the court is that this is really this no reasonable basis standard is really something that polices the agree just cases because it has to be the case that the plaintiffs can come forward with information and that the basis that the company had is really outside the bounds of reasonableness and we need to have that for agree just cases for example if there was a company that really didn't know investigation before putting statements like financial statements or financial predictions in it i want to just say the statement turned out to be fools we don't doubt that he did hold that opinion as his sincere but he had no basis for that whatsoever that's what the complaint negative he didn't you didn't go to didn't go to the library didn't talk to the doctor pretty hard to do i think it depends in the in the context of the entire complaint whether there's sufficient factual matter there or not but they get what i would tell the court is that this kind of issue not with respect to opinion specifically but in general arises in omissions cases and there are many omissions cases under section eleven which is not surprising when you think about it because these registration statements are so carefully vetted it's not often the case that you find facts that are stated that are actually untrue and that's really the key point that i want to make when you're thinking about petitioner statement is the f c c does really view this is a problem to say that the petitioners idea that you can just put we believe in front of something and then not have any need to make an investigation into it or see whether it has a basis that we submitted to the jury in other words you can look not to see if in fact it has a reasonable basis put to the evidence about how on reasonable basis to suggest that the belief was not sincere think the key point is the language congress enacted that congress did not limit liability to statements that are literally true or false there could be statements that are literally true like he had the belief but were misleading and i think that that's the situation there are places where you could have something that is subjectively believe  a company in litigation in the company or thinks we're going to win this we can but they haven't been winning it they don't disclose the fact that there are some serious risks there and that's the kind of thing that really should be put in writing this is a fat not only the private right of action i was uncertain whether it severely compromised yes the language the operative language is nearly identical this is between section eight which is about the f c c stop orders and section eleven and the key language is that there has to be the misstatement of material fact or the omission that makes the  because the omission is present makes the statement not misleading so this is this is nearly identical language and the f c c has taken the position for many years that in fact the lack of a reasonable basis is a serious problem even if the person sincerely believes that those are the cases cited in our brief and the reason we're here today is because it will severely hampered the f c c is authority as well as the authority of private persons to recover if you can just put things in registration statements without do you have a basis for them thank you thank you mr chairman we have seven minutes remaining thank you mr chief justice this is the rare case in which none of the parties is defending the reasoning of the court of appeals and just to reiterate the court of appeals in this case held that the fast food a requirement in section eleven operates differently because section eleven is a strict liability statute that's the reasoning at page forty seven of the joint appendix so the real question before this court is whether to reverse out right as we submit this court should do or to vacate and remain and for application of a somewhat different legal standard such as the reasonable basis standard i want to really set out three reasons in this republic why we believe the court should reverse right first of all i want to focus on the text of the statute and to go to the colloquy justice kagan that you and i were having and the similar colloquy that you also had with my colleagues at the bar whether or not there is a reasonable basis is not a fact that can be said to be omitted and that is for the precise reason that this test is not simply a song basis standard this is a reasonable basis standard that requires some evaluation of whether the basis is sufficient and so that is really a judgment it is really a matter of opinion and i don't think that it can fairly be said to be a fact that is a bit and again as i suggested earlier might be omitted facts such as i didn't check with any of my lawyers who are i checked with my lawyers and they told me the opposite i mean those are facts and that's the thing that makes  the statement in the registration statement itself misleading and so the only point i would add is a point that i think i made in my opening argument which is that the statement of material fact here is still the statement of opinion and there is nothing misleading about that statement as to that stated fact that is to say either that is the opinion of the issuer or it is and i think it was telling that mr goldstein in his argument but i think what ms is saying maybe not goldstein is that there's another part of the statute which is omissions and that those omissions of that i didn't check with anybody or i check with everybody and they said the exact opposite that's the thing that makes my own statement misleading and that's why it fits within the stat right but it still has to be in a mission that is in the words of the statute necessary to make the statements they are in not misleading and again we think that the statements they're in are really the statements of material fact that mr goldstein made a somewhat different text or argument i want to address that to just to kind of lay all of our cards on the table he argued that in essence because this concept of due diligence this concept of having a reasonable belief exists in the affirmative defense that this court can somehow just import that concept into the affirmative falsity requirement and to me that really illustrates why this is profoundly a textual view because in essence what he is saying is that although congress incorporated a reasonable the standard in certain specific context with regard to defenses for persons other issue or you should impose it as an affirmative requirement with regard to statements of opinion whoever the speaker is and again we simply don't think that can be squared with the text of the statute i would note a couple of pretty things in response to mr hart ski's argument as to the text here first of all as i said in my opening if congress wanted to specifically impose viability in the absence of a reasonable basis it certainly could have done so there are statutes outside the securities context that use that phrase in order to impose liability but eight b where that statement is inaccurate or incomplete in any respect in our view that is broader language that would give us e c somewhat more expansive authority if it believes that a statement of opinion is objectively false with regard to virginia  know one thing in response to just a set of my worst question and that is that as we point out at page ten of our reply brief there was no jury finding in virginia bank shares on the issue of subjective disbelief this court was instead characterizing the jury's finding precisely because this court believed that what it meant for a statement of this writing to be false was for the speaker to have acted with subjective disbelief and again i would point the court to what we said in a reply brief we cite the verdict form as confirmation that proposition thirteen i want to say just a word about the policy considerations here pro and con a reasonable basis standard as i pointed out earlier we believe that that standard is a more focused and i don't think that anything that's taken place in the intervening half an hour has dispelled that property mr hosty says that whether or not the basis is reasonable is whether or not the basis is one that would be expected under the circumstances and i would respectfully submit that that really doesn't provide much more by way of clarity and it certainly would make it very easy for a plaintiff to complete a claim under this legal standard because all they would presumably have to say is that the basis is not that that was expected under the circumstances and as mr goldstein said this inquiry would be very context specific and again in a context where issuers really require predictability and certainty we believe that that is called comfort there's one of the policy consideration however which i didn't mention earlier that i just want to mention very briefly there are very few statements  that are required to be included in registration statements or is the statement of the auditor the statement of the lawyer that the issuance of these securities is valid but beyond that the statute in the regulations really do not require payment very many these statements and we therefore believe that a standard an amorphous a liability standard like the reasonable basis standard will really have a chilling effect in cases of this variety and i would note as was illustrated in the discussion with mr goldstein that in this case most of the statements at issue were accompanied by cautionary language and i think the reason why that is so is that the reason why companies like omni care make disclosures like this is precisely to warn sense that we certainly think that subjective disbelief would still be required and of course we believe that is the holding of this court's decision in virginia bank shares as it has been understood but i make the point for a somewhat different reason which is simply to illustrate w issuers believe that it is desirable to make statements of the spirit and if issuers are subject to liability under an amorphous standard they will simply omit to do so thank you thank you counsel cases submitted