The pressure on executives of publicly traded companies to put the best face possible on their companies’ prospects is intense. Indeed, on a quarterly basis, high-level corporate officials face investors and analysts who demand to know how they assess their companies’ financial performance.
In the past, federal securities laws seemed to give corporate officials breathing room for making factually based, optimistic predictions about their companies’ prospects—so called “optimistic puffing.” Such puffery typically has been immune from prosecution under the securities laws on the theory that a reasonable investor would not consider such statements in a decision whether to buy or sell a security.
