Misleading Public InformationGENERAL ANTI-FRAUD PROVISIONS
A. Duty to Disclose All Material Information – Rule 12b-20 of the Securities Exchange Act of 1934 (the “Exchange Act”) requires that companies must, in addition to providing the information expressly required in a report or other statement to the Securities and Exchange Commission (“SEC”), include any additional material information that may be necessary to make the required statements not misleading in light of the circumstances.
B. Liability for False and Misleading Statements – Section 18 of the Exchange Act imposes liability for false and misleading statements in documents filed with the SEC to any person who makes such false or misleading statements, subject to applicable defenses.
C. Exchange Act Section 10(b) and Rule 10b-5 – These provisions broadly prohibit fraudulent and deceptive practices and untrue statements or omissions of material facts in connection with the purchase or sale of any security. Unlike Section 18, these provisions apply to any information released to the public by the issuer and its subsidiaries, including press releases and annual and quarterly reports to shareholders.
D. Executive Officer Certification of Reports and Financial Statements – As discussed in more detail below, a company’s certifying officers can be held personally liable for any untrue statement of material fact or material omission necessary to ensure that statements contained in the reports or other statements to the SEC are not misleading.
E. Control Person Liability – Section 20 of the Exchange Act and Section 15 of the Securities Act of 1933 (the “Securities Act”) provide that a person controlling any person liable under those statutes may be liable jointly and severally and to the same extent as its controlled person for violations of the Exchange Act.
(Citation: SEC Exchange Act)