A recent ruling by the Supreme Court may make businesses think twice about what to add to Private Placement Memorandum when trying to raise new working capital. The Court addressed the use of opinion statements in PPMs as investors rely on the information presented when deciding whether to make an investment. As Congress specifically confronted the issue at the time of passing the pertinent securities law, the Court has further tackled the same by looking at the over-reliance of opinion in the PPM.

The Court did not want the business to get around the requirement of having correct, factual information in the PPM by attempting to simply make all statements a matter of opinion. Also, the Court looked at the omission of fact when including the opinion that would otherwise make the opinion misleading such as leaving out potential risks in the venture to make the worthiness of the investment seem much more lucrative.

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