Securities — Subsidiary’s Failure to Disclose Parent’s Financial Condition / Materiality

Resolving what she identified as a question of first impression, District Judge Nancy Edmunds held in J&R Marketing v. General Motors Corp., 2007 U.S. Dist. LEXIS 13227 (E.D. Mich. Feb. 27, 2007), that a wholly-owned subsidiary which issues securities (GMAC) has no duty under § 11 or § 12(a)(2) of the 1933 Act to disclose financial information of its parent company (GM).

Separately, the Court held that a restatement of a series of quarterly financial results — net revenues — which did not exceed 0.8% in any quarter was immaterial as a matter of law.

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