Search

Securities disclosure standards are the same for both paper-based and Internet offerings, but courts have often distinguished between investors considered sophisticated or professional and those less experienced or limited. Because courts make a distinction, they have tended require a stricter standard of disclosure. Because Internet offerings often target the unsophisticated investors, the stricter standard of the courts most likely will be applied.

Securities analysts are essential for determining what investments are right for investors. However, analysts must be careful what information they disclose to clients and thus many firms have developed Chinese Wall policies to avoid legal problems. Analyst rules based on various securities laws are discussed.

The bespeaks caution doctrine operates as a defense in securities fraud cases when adequate cautionary language accompanies forward-looking statements that are the basis of the litigation. The doctrine is based on materiality and reasonableness of reliance arguments and can be applied both at the pleading stage and the summary judgment stage. Courts typically require precision in the disclaimers used, and the mere presence of cautionary language will not automatically result in the application of the doctrine.