Measuring Veracity for Securities Fraud Purposes
From Operating Local 649 Annuity Trust fund v. Smith Barney Fund Mgmt., LLC, 2010 U.S. App. LEXIS 2954 (2d Cir. Feb. 16, 2010):
The veracity of a statement or omission is measured not by its literal truth, but by its ability to accurately inform rather than mislead prospective buyers. Cf. Greenapple v. Detroit Edison Co., 618 F.2d 198, 205 (2d Cir. 1980); Beecher v. Able, 374 F. Supp. 341, 347 (S.D.N.Y. 1974) ("'[A] statement which is literally true, if susceptible to quite another interpretation by the reasonable investor . . . may properly . . . be considered a material misrepresentation.'") (quoting SEC v. First Am. Bank & Trust Co., 481 F.2d 673, 678 (8th Cir. 1973). Some literally accurate statements can, "through their context and manner of presentation, [become] devices which mislead investors." McMahan & Co. v. Wherehouse Entm't, Inc., 900 F.2d 576, 579 (2d Cir. 1990).
Share this article: