"Buried Facts" Doctrine
"Bespeaks Caution"Doctrine
PSLRA Safe Harbor
No actual knowledge
The plaintiff fails to prove the defendant had actual knowledge that the forward-looking statement was false. This safe harbor applies to oral or written forward-looking statements and immunizes reckless or negligent forwardlooking statements from private liability.
Immateriality
The forward-looking statement was immaterial. This safe harbor focuses attention on whether the forward-looking statement is too “soft” to be material and opens the door to the judicial “bespeaks caution” doctrine as a separate basis for immunity.
Cautionary statements
The forward-looking statement “is identified as a forwardlooking statement and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the forward-looking statement.” This safe harbor provides the clearest protection because it calls for the dismissal of a lawsuit without an inquiry into knowledge or materiality, thus avoiding costly discovery and further litigation. Although the PSLRA does not define the important terms “accompanied,” “meaningful,” or “important factors,” the Act’s legislative history indicates that boilerplate cautions are not enough. Instead, the cautionary statements must “convey substantive information about factors that realistically could cause results to differ materially from those projected in the forward-looking statement” and must be “relevant to the projection.”
(1) projections of revenues and other financial items;
(2) plans and objectives for future operations;
(3) statements of future economic performance, including MD&A statements
of financial condition and results of operation;
(4) assumptions underlying these statements.
The PSLRA's safe harbor applies only to SEC reporting corporations.
"Bespeaks Caution"Doctrine
PSLRA Safe Harbor
No actual knowledge
The plaintiff fails to prove the defendant had actual knowledge that the forward-looking statement was false. This safe harbor applies to oral or written forward-looking statements and immunizes reckless or negligent forwardlooking statements from private liability.
Immateriality
The forward-looking statement was immaterial. This safe harbor focuses attention on whether the forward-looking statement is too “soft” to be material and opens the door to the judicial “bespeaks caution” doctrine as a separate basis for immunity.
Cautionary statements
The forward-looking statement “is identified as a forwardlooking statement and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the forward-looking statement.” This safe harbor provides the clearest protection because it calls for the dismissal of a lawsuit without an inquiry into knowledge or materiality, thus avoiding costly discovery and further litigation. Although the PSLRA does not define the important terms “accompanied,” “meaningful,” or “important factors,” the Act’s legislative history indicates that boilerplate cautions are not enough. Instead, the cautionary statements must “convey substantive information about factors that realistically could cause results to differ materially from those projected in the forward-looking statement” and must be “relevant to the projection.”
(1) projections of revenues and other financial items;
(2) plans and objectives for future operations;
(3) statements of future economic performance, including MD&A statements
of financial condition and results of operation;
(4) assumptions underlying these statements.
The PSLRA's safe harbor applies only to SEC reporting corporations.
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