U.S. Companies Walk Legal Tightrope as Earnings Season Kicks Off

Wednesday, April 15, 2020

Chris Bellini discusses how the Securities and Exchange Commission’s guidance on reporting earnings outlooks during the coronavirus pandemic could create pitfalls for U.S. companies in The New York Times and U.S. News & World Reports. The SEC advised companies to discuss in disclosures and during investor calls how their operations and financials may change as efforts to fight the virus continue, giving the country a better understanding of when the economy might reopen. However, doing so could expose companies to potential investor litigation if predictions are inaccurate. 
“The SEC may not second guess issuers’ good-faith attempts to provide this limited information, but the plaintiffs’ bar may not take the same approach,” said Chris. “It is too big a risk for issuers to provide meaningful forward-looking statements.”
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