In 2010, after working at Regions Bank for 6 years, Noah Lott helped found Nova Capital Corporation, a venture capital firm that invested in the technology sectors. NCC went public in 2012, and Lott served as its CEO and chairman of the board. Various documents filed with the SEC stated that Lott "earned his MBA in finance from Harvard University and an undergraduate degree in management." In fact, he attended Harvard for only year and did not graduate. After being pressured by a journalist, Lott disclosed the misrepresentation to the NCC board. The same day, the company issued a press release correcting the statement.

The press responded negatively to "another CEO that lied about his resume" and speculated about "what else might not be right." On the day the press release was issued, NCC's stock price dropped from $33.58 per share to $26.40, but it fully recovered within a six weeks.

Shareholders sued, alleging that the misrepresentation violated section 11 of the 1933 Act, section 10(b) of the 1934 Act, and Rule 10b-5.

• Was Lott's lie about having a college degree material?
• Would your answer be the same if a CEO lied about having helped to take a company through an initial public offering and subsequent acquisition by another company and having led a pharmaceutical company from incorporation through human clinical trials and launch of a new drug?