A motion to approve a class action was filed against a public company, arguing that the company had to report a suspicion of existence of a cartel in the company’s field of business, significantly effecting the entire market and particularly the profits of the company.
The Court dismissed the motion and held that a public company has to report on the environment in which it operates, but it is not obligated to comment on rumors or unverified news items being published by the media, because it may impose significant costs and lead to flooding of information that would harm the reasonable investor, who likely does not have the means to examine, filter and evaluate this information. It is important that information will be reported to the public only when the possibility of its existence is almost certain. In this case, the information was not controlled by the company and the company could not corroborate or disprove it, but just reflect it to the public, and therefore such a report would not have contributed to the reasonable investor or the market efficiency.