Securities Regulation Daily Wrap Up, SECURITIES OFFERINGS—U.S.: Cert petition asks: Do companies need a crystal ball to avoid liability?, (Jun 15, 2026)

By Rodney F. Tonkovic, J.D.

The petition argues that Ninth Circuit says that companies must predict the future in their risk disclosures or face liability. The petition argues that in direct contrast with three other circuits, the Ninth Circuit held that Securities Act Section 11 requires disclosure.

A petition for certiorari asks the Supreme Court to clarify the scope of disclosure obligations under Securities Act Section 11 and resolve a wide circuit split. The case stems from a Ninth Circuit ruling reviving claims that ON24's IPO disclosures were misleading for warning only of potential customer churn that the company allegedly knew had already begun to materialize. ON24 argues that the decision improperly requires issuers to treat uncertain future risks as present facts, exposing them to fraud by hindsight litigation. The petition contends that this approach conflicts with other circuits and is inconsistent with Supreme Court precedent and the text of the regulations (Petition for Writ of Certiorari, ON24, Inc. v. Leadersel Innotech ESG, No. 25-1376 (June 8, 2026)).

ON24. Petitioner ON24 offered a cloud-based platform used to transition business from traditional marketing to digital approaches. The company generated revenue by selling subscriptions as annual contracts billed in advance. ON24 experienced robust growth rate in 2019, and this accelerated dramatically as the COVID pandemic took told and business turned to the company as a remote solution. The growth came from both new and existing customers.

In early 2021, ON24 conducted its IPO, and the company prominently disclosed the role the pandemic played in its recent growth. The IPO was accompanied by extensive risk disclosures warning of reduced demand when the impact of COVID diminished and a corresponding reduction in revenue and revenue growth. After the IPO, ON24's growth continued, but failed to meet analyst expectations, and the company's stock price fell.

A plaintiff shareholder then filed a class action alleging under Securities Act Section 11 that ON24 had experienced an influx of "atypical" customers. ON24, the complaint alleged, knew at the time of the IPO that these customers saw the subscriptions as a COVID-related expense and would not be renewing. So, ON24 acted misleadingly in describing future non-renewal as a "risk" rather than a "certainty."

The district court dismissed the complaint, reasoning that the allegations at most described a warned-of risk of churn. In an unpublished order, the Ninth Circuit reversed, finding five misleading statements. According to the panel, the plaintiff sufficiently alleged that ON24 knew that the risk of material churn had started to materialize before the IPO but only disclosed that risks may occur.

Circuit split. The petition argues that the disclosure requirements imposed by the Ninth Circuit here far exceed those of any other circuit and are unworkable. Companies will be required to flood investors with irrelevant information, ON24 argues, and the Ninth Circuit will become the forum for plaintiffs alleging fraud-by-hindsight after a stock drop.

The petition says that the First, Third, and Tenth Circuits have held that risk disclosures are not misleading when they describe hypothetical risks that have not yet occurred and are not certain to. The petition contends that none of the allegations showed that ON24's revenue and revenue growth rate were already declining or would certainly decline or that a material number of new customers would not renew. The Ninth Circuit, however, "requires plaintiffs to predict the future" and requires that once the possibility of a material adverse event is learned of, it must be disclosed as a certainty.

The petition points out that the Court looked at this issue in the Facebook petition, which was dismissed as improvidently granted. This case presents the same legal conflict but with facts that allow for a clean resolution of the question presented, ON24 promises.

Other issues. Continuing, the petition says that the case also implicates the question presented in the petition in the Robinhood case, which also arose from the Ninth Circuit. As in that case, the court held that the plaintiff sufficiently alleged a violation of Section 11 even though it failed to show that the alleged omissions were material and made a statement misleading. This, the petition says, cannot be squared with precedent or the text of the securities laws, which both state that without a duty to disclose, an omission is actionable only if it is material and misleading. The statements at issue in this case, ON24 says, were neither material nor misleading.

As in Robinhood, there was also a claim in this case brought under Item 303. As with the Section 11 claims, the petition argues that the Ninth Circuit ignored the Item's text and required the disclosure of immaterial information, resulting in a "boundless disclosure obligation" that cannot be squared with the general rule that there is no obligation to disclose the results of a quarter in progress.

The petition is No. 25-1376.

Attorneys: Brian Robert Matsui (Morrison & Foerster LLP) for ON24, Inc.

Companies: ON24, Inc.; Leadersel Innotech ESG

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