Basic truths: the implications of the fraud-on-the-market theory for evaluating the "misleading" and "materiality" elements of securities fraud claims

Article Abstract:

The requirements in securities fraud-on-the-market cases that the statements in question be both misleading and material should be interpreted to require an evidentiary showing that professional investors would find the information both misleading and material. In Basic, Inc. v. Levinson, the Supreme Court appeared to adopt this standard but claimed to use the perspective of the reasonable investor. Professionals, and not investors, make the price-setting decisions in securities markets. The fraud-on-the-market theory would be more efficiently applied by explicitly stating that the materiality and misleading standards are from the professional perspective.

Material facts (Law)

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Safe harbors: historical and current approaches to future forecasting

Article Abstract:

The long term effects of the Private Securities Litigation Reform Act of 1995 will be a decrease in litigation and a related increase in forward-looking information disclosures by public corporations. The Act's safe harbor provisions along with recent judicial tendencies should decrease shareholder actions against corporations for misrepresentations or omissions in statements and public offerings. The Act's ambiguities, which may not be clarified by the SEC, may lead to a short-term increase in litigation.

Forecasts and trends, Stock-exchange, Stock exchanges, Disclosure (Securities law)

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