Carmen M. Fonda, Kirill Y. Nikonov, Jordan D. Jean, and Lauren Fields published “Forward-Looking Statements: Safe Harbors” in the November edition of Insights newsletter. The following is an excerpt:
The securities law disclosure framework has evolved to encourage: 1 companies acting in good faith to disseminate relevant projections pertaining to their businesses to the general public “without fear of open-ended liability.” 2 Sharing financial projections and other information about anticipated events and developments—in press releases, earnings calls periodic filings, and prospectuses of registered offerings—has become a routine practice for reporting issuers, but so have the stockholders’ lawsuits alleging that such statements were fraudulent when forward-looking statements did not come to fruition or when they contain an error. Many issuers struggle to effectively leverage relevant safe harbors and craft appropriate safe harbor language, potentially inviting plaintiffs to capitalize on such errors.