Public Companies, Beware! Safe Harbor Protection Requires Thoughtful Warnings and a Sophisticated Defense
Lane Powell Shareholder’s Doug Greene and Claire Loebs Davis co-authored an article in Seattle Business magazine’s February 2014 issue titled “Public Companies, Beware! Safe Harbor Protection Requires Thoughtful Warnings and a Sophisticated Defense.” In the article, Greene and Davis discussed the Private Securities Litigation Reform Act’s Safe Harbor provision for forward-looking statements. They mentioned that the Safe Harbor is anything but straightforward, and 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. They also provided tips for providing a successful securities litigation defense.
Public companies around the country labor under the misunderstanding that the Private Securities Litigation Reform Act’s “Safe Harbor” provision protects them from liability for publicly announced earnings guidance and other forward-looking statements. But the Safe Harbor is really not so safe; in fact, many judges go to great lengths to avoid the statute’s plan language and told companies responsible for false forward-looking statements.