The Devil’s in the Details: Insider Tips to Avoid Investor Misrepresentation Lawsuits
Material misrepresentations cases have been ticking up over the past few years. While some instances may be intentional, genuine errors on the part of the company can also lead to misrepresentation claims against the business. Below are three tips to ensure your communications are airtight:
Communicate Carefully: The most obvious tip is also the most important one. Material misrepresentation cases make false advertising cases look like child’s play - you need to make sure you have multiple eyes reviewing materials for false or exaggerated information. Investor communications is not the place to overinflate factual information.
Trust the Experts: Even small companies should have a dedicated IR team - if you don’t have the budget for an internal one, outsource. Good IR teams catch these mistakes before information is filed or disclosed. An outsourced IR advisor costs much less than a fine from a misrepresentation judgment.
Learn from Others’ Mistakes: Material misrepresentation covers a wide range of corporate wrongdoings. Look over recent cases brought by the SEC against companies to see where they made their mistakes. The more you and others know, the less likely you are to mess up.
Finding a solid IR outsourced team is the best insurance policy against misrepresentation claims. Reach out to Graham Farrell (Graham.Farrell@Harbor-Access.com) [in Canada] or Jonathan Paterson (Jonathan.Paterson@Harbor-Access.com) [in the US] to start a conversation.
