This month we discuss Slayton v. American Express Co.,1 in which the U.S. Court of Appeals for the Second Circuit addressed for the first time the application of the safe harbor provision of the Private Securities Litigation Reform Act (PSLRA) to forward-looking statements. In a decision written by Judge Robert A. Katzmann, and joined by Judge Guido Calabresi,2 the court held that the safe harbor provision, which is written in the disjunctive, applies to forward-looking statements that are “identified and accompanied by meaningful cautionary language or [are] immaterial or the plaintiff fails to prove that [the statements were] made with actual knowledge that [they were] false or misleading.”3
With respect to this last category, the court also held that the Supreme Court’s decision in Tellabs, Inc. v. Makor Issues & Rights, Ltd.4 applies to plaintiffs’ pleading of “actual knowledge,” and thus requires plaintiffs to plead facts establishing an inference that defendants had actual knowledge of falsity that is at least as compelling as any opposing inference. The Second Circuit further confirmed that the PSLRA’s safe harbor provisions may apply to statements made in the Management Discussion and Analysis (MD&A) section of SEC filings.
Procedural History
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