When Corporate Managers Fear a Good Thing is Coming to an End: The Case of Interim Nondisclosure

Abstract:     
Every public offering of securities is necessarily made some time during a fiscal quarter. Companies are obliged to disclose fall quarter operating results, but their obligations regarding the as-yet-incomplete quarter remain unclear. In this Article, Professor Mitu Gulati tackles both the normative question of whether companies doing offerings should be required to disclose their unripe information concerning the current quarter and the doctrinal question of whether such an obligation already exists within the framework of disclosure duties. The Article concludes that, while market forces and regulatory requirements operate to solve the interim nondisclosure problem in the majority of cases, there exists a small subset of cases -- paradoxically, the subset of cases involving the largest, most well-established companies ?- that calls for regulation. The doc-trinal approach taken by the courts thus far, which has been to impose no more than a narrow disclosure obligation under Item 303 and reject any general obligations under Rule 10b-5, dovetails with the type of circumscribed disclosure obligation that the Article?s normative analysis suggests.

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