Safe Harbor Protection Requires Sophisticated Defense
Lane Powell Shareholder Doug Greene authored a September 6 Law360 article titled “Safe Harbor Protection Requires Sophisticated Defense.” In the article, Greene discussed the Private Securities Litigation Reform Act’s Safe Harbor for forward-looking statements. He stated that the Safe Harbor may not be as safe as many believe it to be, noting that some judges go to great lengths to avoid the statute’s plain language because they don’t like the idea that a safe harbor allows companies to escape liability for knowingly false forward-looking statements. Greene also provided tips for providing a successful securities litigation defense.
Public companies around the country labor under a misunderstanding: that the Private Securities Litigation Reform Act’s safe harbor protects them from liability for their guidance and projections if they simply follow the statute’s requirements. But the safe harbor is not so safe — because they think it goes too far, many judges go to great lengths to avoid the statute’s plain language. Companies and their securities litigation defense counsel can usually work around this judicial attitude and take advantage of the statute’s protections, however, with the right approach to preparing and defending the company’s disclosures.