Replies to post #110210 on Biotech Values

[mouton29]

<< I absolutely agree that if a company privately communicates future expectations of any kind to an analyst in a manner substantially different from what they state in the public domain, they assume some responsibility for subsequent statements by that analyst.>>

I don't think entanglement depends on whether the company is saying one thing publicly and another privately to analysts, the question is whether they are saying misleading things to analysts and impliedly blessed the analysts public bloviations. From the case I mentioned in my prior post:

[L]iability may attach to an analyst's statements where the defendants have expressly or impliedly adopted the statements, placed their imprimatur on the statements, or have otherwise entangled themselves with the analysts to a significant degree.... [T]he court will determine whether the complaint contains allegations which, favorably construed and viewed in the context of the entire pleading, could establish a significant and specific, not merely a casual or speculative, entanglement between the defendants and the analysts with respect to the statements at issue.
Schaffer, 924 F.Supp. at 1310. Entanglement also includes situations where company officials "intentionally foster a mistaken belief concerning a material fact." Elkind, 635 F.2d at 163-64. As this articulation of the test makes clear, the district court erred when it required that defendants "controlled" third-party statements. Nonetheless, an entanglement claim will be rejected if it merely suggests or assumes that company insiders provided the information on which analysts or other outsiders based their report

However, all of this relates to an issuer's liability for statements made by analysts reporting on that issuer. The suggestion was this doctrine could be extended to analysts reporting on other companies. I'm not a securities lawyer and don't know whether that would be possible.

[ilpapa]

they assume some responsibility for subsequent statements by that analyst.

In addition to a Reg FD violation.