False or Misleading Statement of Fact. A statement can be characterized as false or misleading and become the subject of a securities fraud enforcement action in several ways:
• The company makes a statement that is literally untrue. For example, stating that: “We have significant new customer agreements in place” when the agreements are in fact not final, is inaccurate.
• The statement made is true, but misleading because important facts were left out. For example, stating that: “We have had exciting discussions about selling our product with several major potential customers,” assuming it was actually true, could be misleading if it were also true that the majority of those potential customers had already rejected a proposed sale.
• The statement is an opinion not fact, but lacks a reasonable basis in fact or is not actually believed. Take for example, the statement: “Our goal is to close 10 major customer deals by the end of the second quarter.” At the beginning of the fiscal year, this may be a perfectly reasonable explanation of the company’s goals over the next six months, and would not be an “actionable” statement. However, if the same statement was made a few weeks before the close of the second quarter, and it is in fact unlikely that the company will achieve its goal of “closing 10 major deals,” then the statement could be challenged as misleading under the securities laws.
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