The test to determine if a misrepresentation is actionable under federal securities law.

The plaintiff filed a complaint alleging, among other things, that the defendant misrepresented its business practices and risk controls in violation of the federal securities laws. An example of the alleged misrepresentations included the defendant’s statement that it had “clear risk management objectives and a well-established strategy and framework for managing risk[.]” Another example was the defendant’s statement that it had “pledged to increase transparency and conduct [its] business in the right way[.]” Ultimately, the court held that the defendant’s statements were not actionable because they were “too general to cause a reasonable investor to rely upon them.” The court further noted that “general statements about reputation, integrity, and compliance with ethical norms” were “inactionable ‘puffery.’”

_{Case Law Alerts, 2^nd Quarter, April 1, 2016}

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