Matt Levine’s Money Stuff: Silence Is Not Securities Fraud

Not everything is securities fraud

“Everything is securities fraud,” I like to say around here, meaning:

1. Sometimes a public company does a bad thing, or has a bad thing happen to it.

• 2. News of the bad thing comes out and the stock drops.

• 3. Shareholders sue, saying “you didn’t tell us about the bad thing in advance, so we bought the stock thinking there was no bad thing, but then we found out that there was a bad thing. We were defrauded; we overpaid for the stock because of your lies.”

Occasionally I add a technical clarification: Simply not ...