Matt Levine’s Money Stuff: Nobody Can Read the Prospectus

Everything is

“Everything is securities fraud,” I often say around here: If a bad thing happens at a company, and its stock drops, it will be sued for securities fraud, because the shareholders didn’t know about the bad thing. Occasionally, though, the company will have a defense: “You did know about the bad thing,” it might say; “it was right there on page 73 of our annual report.”

This doesn’t work that often. Page 73 of the annual report might say something like “we depend on the services of our chief executive officer, and if he were to do anything stupid ...