Securities Regulation Daily Wrap Up, INITIAL PUBLIC OFFERINGS—U.S.: Robinhood petition asks if issuers must disclose interim results, (Feb 10, 2026)

By Rodney F. Tonkovic, J.D.

When is an issuer obligated to disclose events happening subsequent to prior disclosures about past performance?

Robinhood has filed a petition for certiorari asking the Supreme Court to examine the legal standard for claims under Section 11 of the Securities Act. The plaintiff here claimed that Robinhood failed to disclose interim financial data before a July 2021 IPO, while the online broker argued that the IPO documents accurately disclosed its past performance. A divided Ninth Circuit sent the suit back to the district court after finding that the lower court used the wrong standard in determining whether there was a duty to disclose. The petition argues that the Court must intervene to clarify when disclosure of interim financial data is required (Petition for Writ of Certiorari, Robinhood Markets, Inc. v. Sodha, No. 25-944 (U.S. Feb. 5, 2026)).

Meme stock surge. In early 2021, Robinhood saw a sharp rise in trading during the “meme stock” episode, boosting revenue at the end of 2020 and in Q1 2021. As meme driven activity faded during and after the first quarter, revenue from equities, options, cryptocurrency, and other key metrics declined in the second quarter.

IPO. Robinhood went public on July 30, 2021. The IPOs offering documents highlighted substantial growth in late 2020 and Q1 2021 but included only Q1 results; Q2 results were not due for another 45 days.

The IPO materials warned that trading had returned to prior levels after the meme stock peak. The results for Q2 and Q3 bore this out, and Robinhood’s stock price declined after Q3 earnings were released.

In the courts. A class action complaint filed in the Northern District of California claimed that the offering documents failed to disclose pre-IPO declines in key performance indicators and revenue. The district court dismissed the complaint, finding that out-of-quarter disclosures of financial metrics is warranted only in extraordinary cases and that the declines cited by the plaintiff were a levelling off after the fad-trading spikes.

A split Ninth Circuit panel concluded that the district court applied the wrong standards in evaluating the plaintiffs' legal theories under Section 11 of the Securities Act and Item 303 of Regulation S-K. The proper test for the duty to disclose was the test for materiality, not the "extreme departure" test erroneously used by the district court. The panel then held that Item 303 of Regulation S-K requires disclosure, quantified to the extent reasonably practicable, of known trends that are reasonably likely to cause a material change in a company's financial condition or results. Expressing no view on the claims, the panel vacated that portion of the district court's opinion and remanded for re-evaluation of the Section 11 claims.

Petition. The petition argued that the Ninth Circuit's holding resulted in circuit splits on an issuer's disclosure obligations under Section 11 and Item 303. The Ninth Circuit is now an "outlier" in holding that issuers can be held liable under Section 11 on materiality alone. The Ninth Circuit has also split with the Fifth and Eleventh Circuits, which have held that information must be disclosed under Item 303 only when it reflects persistent business conditions.

Section 11(a), the petition argues, does not create a duty to disclose all material information. The plain language of the statute presupposes that some facts are material but not necessary to make a statement "not misleading." The Ninth Circuit's rule is at odds with the black-letter law that there is no duty to update statements about historical performance that do not imply anything about future results. There is no real limit to the Circuit court's position, the petition says: "it just means that material facts are automatically misleading whenever they post-date the historical disclosure."

The Ninth Circuit's holding conflicts with Supreme Court precedent and its application in other circuits. Under that precedent, disclosure is required only if an omission renders an affirmative statement misleading. Unlike the Ninth, other circuits have treated the materiality and misleading requirements as distinct, and the First Circuit has held that intra-quarter results that are an extreme departure must be disclosed (a test the Ninth explicitly disavowed).

The petition argues further that the Ninth Circuit also wrongly interpreted Item 303. Robinhood maintains that the majority erred in rejecting a temporal limitation for Item 303 disclosures, arguing that a "trend" excludes developments of short duration. But, a company has no general obligation to disclose the results of a quarter in progress, and to routinely require disclosure of intra-quarter results at odds with this settled rule.

The petition argues that both Congress and the SEC have declined to adopt a "continuous disclosure" system and the only exception is limited to major, unscheduled events. The Ninth Circuit decision could upend the SEC's periodic reporting system by requiring real-time data, acting to the detriment of both investors and issuers, the petition says.

Read the Docket. This case, and others before the Court, may be referenced in the latest version of the Supreme Court Docket. Issued opinions, granted petitions, pending petitions, and denied petitions are listed separately, along with a summary of the questions presented and the current status of each appeal.

The petition is No. 25-944.

Attorneys: Jeffrey B. Wall (Sullivan & Cromwell LLP) for Robinhood Markets, Inc.

Companies: Robinhood Markets, Inc.

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