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Safe Harbor for Stock Pumping Scheme?

Dave Hoffman

Dave Hoffman is the Murray Shusterman Professor of Transactional and Business Law at Temple Law School. He specializes in law and psychology, contracts, and quantitative analysis of civil procedure. He currently teaches contracts, civil procedure, corporations, and law and economics.

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5 Responses

  1. arthur says:

    The disclaimer will protect the promoter from being charged under section 17(b). Why do you think it would not? The “forward looking statement” disclosure may be insufficiently specific to be effective, depending on what appeared in the ellipis. Also, it should reference section 27E of the 1934 Act, not 27B. Without those disclosures, the promoter would be in serious jeopardy. It’s possible that the promoter is misrepresenting his personal belief on how the stock will perform, but that would be almost impossible to prove, so the SEC probably won’t even try. This lawyer earned his keep.

  2. conrad erb says:

    dave – can you give us dear readers more info re: why you think that this particular disclaimer would not protect the client?

  3. conrad erb says:

    dave – can you give us dear readers more info re: why you think that this particular disclaimer would not protect the client?

  4. Dave Hoffman says:

    Safe harbors are (in my view obviously) unavailable when the cautionary language is part and parcel of the scheme to deceive.

  5. Jon says:

    I’m not trying to point out a typo, but it is really funny if the disclaimer was gramattically incorrect…see below:

    ‘Many of these companies are on the verge of bankruptcy. You can lose all your money “buy” investing in this stock.’

    Shouldn’t it be “by”? Looks like the boiler room hack’s lawyer didn’t earn his keep.