Supreme Court Declines To Hear Appeal in M&T Bank Merger Case

On January 25, 2020, the United States Supreme Court denied a petition for a writ of certiorari in a closely watched attempt by M&T Bank Corporation (“M&T”) to overturn the Third Circuit’s ruling in Jaroslawicz v. M&T Bank Corporation, 962 F.3d 701 (3d Cir. 2020).

In Jaroslawicz, the Third Circuit reversed a district court’s dismissal of a shareholder lawsuit which accused M&T of failing to disclose certain risks associated with M&T’s merger with Hudson City Bank.  Shareholders alleged that M&T violated Section 14(a) of the Securities Exchange Act of 1934 by violating SEC Rule 14a-9, which bars materially false or misleading statements in a proxy.  

Shareholders alleged that, by failing to disclose certain information about risks M&T faced, M&T failed to meet its obligations under Item 503 of Regulation S-K, since recodified as Item 105, to disclose “the most significant factors that make an investment in the registrant or offering speculative or risky.”  Id. at 705-06 (citing 17 C.F.R. §229.105).  In particular, shareholders alleged that M&T omitted information about the bank’s regulatory compliance program.  Id. at 710.  The Third Circuit agreed holding that M&T’s proxy statement omitted necessary company-specific detail about the bank’s effectiveness at combating money laundering and the bank’s problems with its consumer checking business.  Id. at 713-15.

By refusing to grant the petition for a writ of certiorari, the Supreme Court allowed the Third Circuit’s decision to stand as precedent within the Circuit.