ON THE INFORMATIVE SECURITIES FRAUD AND STOCK PRICE MANIPULATION：FOCUSING ON FORWARD-LOOKING INFORMATION

• Main Authors: Chi-Neng Wang, 王麒能
• Other Authors: Yu-Wei Cheng
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/67629886263519865410

碩士 === 國立中央大學 === 產業經濟研究所 === 100 === Most of the investors willing to invest a company are because they have faith in the company’s further development and future prospect. When a company provides optimistic forward-looking information, it will attract the purchase of a large amount of investors, causing a rapid increase in the stock price. However, if the prediction of the company does not match the subsequent fact, it usually causes the securities prices plunged, and the damaged investors therefore file that the former forward-looking statement of the company constitutes securities fraud. The early court considered that the sales conversation of the seller constructed only an opinion but not a statement of facts, as so was non-actionable. But the SEC considers that if the forward-looking information such as opinions or forecasts providing by the company have the materiality, and the statement is not out of the good faith or is not having a reasonable foundation, it is likely to violate anti-fraud provisions. As for the actions took by analysts or investment adviser, they are purely personal opinions or forecasts, so even though they might be confirmed subsequently non-accurate or not correspond to the development of facts, they should not be able to constitute a rumor or false information; but if the prediction is based on inconvincible facts or making predictions in case of deliberately concealing certain facts, it is likely to be actionable. Since forward-looking information has the nature of speculation, it’ll fall into the hindsight if regarding the forward-looking information as false information merely due to its inconsistency to the subsequently facts while judging whether the perpetrator conducts fraud and manipulations by distributing it. Therefore, it should start from the materiality of the forward-looking information, and then determine causal relationship and the subjective components if it has the materiality. Materiality is the key element of anti-fraud provisions. Through the practical cases in the U.S, forward-looking information except the initial merger case using Probability / Magnitude Test, materiality of the rest forward-looking information is based on the Substantial Likelihood Test , that is if there is a substantial likelihood that a rational investor would consider the forward-looking information while making the decision, and there is a substantial likelihood that the forward-looking information would alter the total mix information, the forward-looking information is to be consider having materiality. The U.S. securities market is dominated by institutional investors, who have more investment experiences. Because investors conducted litigations indiscriminately under the encouragement of SEC toward companies to provide forward-looking information, the court then rejects the litigations in the name of not having materiality. However, the securities market of our country is dominated by personal investors, who don’t have enough professional knowledge comparing to institutional investors, and are easily affected by outer information. In order to avoid interested parties taking advantage of this characteristic, earning illegal profits from distributing false information to manipulate security prices, this article attempts to discuss from aspects such as development of forward-looking information in the U.S, integrated event status, subject of statements, and occasion of statement to determine the materiality of forward-looking information, and tries to divide more refined lines of responsibility.