CHAPTER § 11.04 Conclusion and Recommendations

• Jurisdiction: United States

§ 11.04 Conclusion and Recommendations

Unfortunately, there is no fail-safe talisman against the threat of securities litigation. So long as markets rise and fall, there will be plaintiffs suing to recover their trading losses by alleging, with the benefit of hindsight, that adverse information should have been disclosed earlier. But liability risks under the federal securities laws can be ameliorated, such that when and if securities litigation strikes, a company may weather the litigation with as little cost and distraction as possible. The following recommendations should advance those goals:

1. Implement strong disclosure controls. The single best way to guard against litigation—or to permit its favorable resolution if filed—is to implement procedures that ensure the funneling of all potentially material information to persons responsible for making the company's public disclosures. Those persons should be trained regarding the federal securities laws and should be responsible for all of the company's public statements.
2. Apprise managerial personnel firm-wide of the risks of securities-laws liability. Obviously, executives with substantial contact with investors or media should be well-versed in avoiding disclosure pitfalls. Personnel responsible for the design and conduct of clinical trials, as well as managers charged with supervising regulatory

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