October 20, 2016
Topical Highlights for Securities provides summaries of significant federal and state judicial decisions and legislative and administrative activities affecting Securities law. A Westlaw subscription is required to access the documents linked from this page.
Fraud: Alleged misstatements affecting less than five percent of company’s overall results were still “material” to investors. United States Securities and Exchange Commission v. DiMaria, 2016 WL 4926200 (S.D.N.Y.) The Securities and Exchange Commission’s (SEC) complaint against a chief financial officer (CFO) and a vice president (VP) of an online provider of personal finance information sufficiently alleged that the two made material misstatements, as required to state a claim for securities fraud. The SEC alleged that the officers made deliberate misstatements about the measures taken to manage the company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and adjusted earnings per share (EPS), in order to hide a failure to meet analyst expectations. And even if their alleged misstatements related to less than five percent of overall results, the statements were used by reasonable investors in deciding how to act, and thus, material, since the company highlighted them in the opening paragraphs of its earnings release and in its earnings call. 2016 WL 4926200 (The full-text of the rest of the Topical Highlights is available within Thomson Reuters Westlaw, subscription required).