The Securities Litigation Reform Act's safe harbor for forward-looking statements would deter fraud suits against companies

Article Abstract:

The U.S. House of Representatives' passage of the Securities Litigation Reform Act promises to restore sense and equitability to shareholder litigation accusing companies of fraud. The current laws and climate encourage hasty, ill-considered and poorly researched lawsuits that actively discourage companies from making any forward-looking projections, especially positive ones. This hurts investors as a whole, who need that information. Lawsuits are also very costly for companies and rarely recoup investors' losses. The act includes a provision that would provide a safe harbor for forward-looking financial statements.

United States, Laws, regulations and rules, Political aspects, Securities fraud, Financial statements

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Shareholder suits suggest some lessons

Article Abstract:

1990 to 1991 saw a tripling of the number of class actions charging securities law violations filed when compared to 1989 and 1990. The federal courts have been willing to dismiss a number of these actions, and the ones dismissed reveal helpful steps to avoid such suits. Disclosure statements are the focal point of shareholder litigation, and disclosure procedures should be cautious and update the company spokesman in a timely manner. The clipping file should be kept up to date and personal trading by directors and key employees with access to inside information should be monitored.

Cases, Securities law

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Current climate calls for crisis planning

Article Abstract:

Corporate defendants in the 1990s face a climate where they are held strictly accountable for their tortious acts. Procedures they should have in place for handling such crises include forming a crisis management group, keeping track of pertinent legal trends, having a corporate ethical code and a compliance officer, anticipating adverse events, making appropriate disclosures in public records, keeping directors well informed and responding as if they were their own constituent.

Management, Practice, Corporations, Preventive law

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