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Re: Florinda post# 5580

Wednesday, 04/20/2011 2:33:27 PM

Wednesday, April 20, 2011 2:33:27 PM

Post# of 163761
If I may wade cautiously into this discussion, I will see if I can shed some light for Florinda and others. I am a lawyer, although not a securities lawyer. And as I always tell people who ask for free legal advice, "you get what you pay for."

With that disclaimer out of the way:

The requirements for the 10K (and 10Q) forms are SEC disclosure requirements. Essentially, they require the company to report-- AFTER THE FACT-- on audited financials, material changes to the business (sale of a division), and material events (such as the filing of a lawsuit, or a government action taken against the company).
Because they are disclosure requirements, and NOT non-disclosure requirements, there is nothing in the SEC Form 10K or 10Q requirements that would allow the CEO to claim that the Form 10 process prohibits him from talking about some aspect of the business.

The reason that CEO's (and CFO's and IR folks) cannot talk about future events that may or may not occur, or are subject to some variables that they cannot control, is because of the real fear of class action litigation, based on "artificial market price inflation". The cost of defending such litigation, not to mention the cost of losing, is so large that companies go far out of their way to avoid making any statements that might be seen to inflate the stock price, if there is any chance the statement may not pan out. It's the same reason most press releases use the "safe harbor" statement that you have seen that "this statement may contain forward-looking statements,etc, etc"
These kinds of statements are specifically allowed, and cannot be the basis for a class action, if they meet all the requirements for the "safe harbor" law. Because the rules are very precise however, the safe harbor applies usually to written statements, and company officials are warned to carefully avoid any forward looking statements on conference calls or other public statements, since the statements might not meet all the requirements for the safe harbor.
So, I am fairly certain that the 10k contains the "forward-looking" safe harbor statement, so that the company can mention the purchases that are still subject to pending government approvals. At the same time, it would be quite unwise for the CEO to discuss future plans, which have not yet been consummated, during a conference call, since the price might be inflated by such comments, and subject him and the company to substantial class-action liability.
Hope this is helpful, and helps people have reasonable expectations for the call tomorrow.

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