The Champion

July 2009 , Page 60 

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The Next Wave: Finding the Line Between Puffery and Securities Fraud

By Kathryn Keneally, Jonathan S. Abernethy

Read more White-Collar Crime columns.

There was a time, not long ago, when the economy was riding high and good times seemed nearly to be a guarantee. Now some of the very financial institutions that appeared to fuel that prosperity are teetering or have crashed and burned. And, as has been widely reported, those institutions and the individuals who drove the economic roller coaster may now face criminal investigation in connection with possible securities fraud.1 As the director of the FBI confirmed in a statement to Congress last fall, 24 large financial companies were then under investigation.2
Whether or not these particular investigations result in charges, it is clear that the current financial crisis will produce a wave of prosecutions and civil suits alleging violations of Rule 10b-5 of the Securities Exchange Act of 1934 based on purported material misstatements about a public company’s performance. These new cases may be bigger and more high profile than securities fraud cases in the past. However, many of the leg

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