[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC78u-5]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2B--SECURITIES EXCHANGES
Sec. 78u-5. Application of safe harbor for forward-looking
statements
(a) Applicability
This section shall apply only to a forward-looking statement made
by--
(1) an issuer that, at the time that the statement is made, is
subject to the reporting requirements of section 78m(a) of this
title or section 78o(d) of this title;
(2) a person acting on behalf of such issuer;
(3) an outside reviewer retained by such issuer making a
statement on behalf of such issuer; or
(4) an underwriter, with respect to information provided by such
issuer or information derived from information provided by such
issuer.
(b) Exclusions
Except to the extent otherwise specifically provided by rule,
regulation, or order of the Commission, this section shall not apply to
a forward-looking statement--
(1) that is made with respect to the business or operations of
the issuer, if the issuer--
(A) during the 3-year period preceding the date on which the
statement was first made--
(i) was convicted of any felony or misdemeanor described
in clauses (i) through (iv) of section 78o(b)(4)(B) of this
title; or
(ii) has been made the subject of a judicial or
administrative decree or order arising out of a governmental
action that--
(I) prohibits future violations of the antifraud
provisions of the securities laws;
(II) requires that the issuer cease and desist from
violating the antifraud provisions of the securities
laws; or
(III) determines that the issuer violated the
antifraud provisions of the securities laws;
(B) makes the forward-looking statement in connection with
an offering of securities by a blank check company;
(C) issues penny stock;
(D) makes the forward-looking statement in connection with a
rollup transaction; or
(E) makes the forward-looking statement in connection with a
going private transaction; or
(2) that is--
(A) included in a financial statement prepared in accordance
with generally accepted accounting principles;
(B) contained in a registration statement of, or otherwise
issued by, an investment company;
(C) made in connection with a tender offer;
(D) made in connection with an initial public offering;
(E) made in connection with an offering by, or relating to
the operations of, a partnership, limited liability company, or
a direct participation investment program; or
(F) made in a disclosure of beneficial ownership in a report
required to be filed with the Commission pursuant to section
78m(d) of this title.
(c) Safe harbor
(1) In general
Except as provided in subsection (b) of this section, in any
private action arising under this chapter that is based on an untrue
statement of a material fact or omission of a material fact
necessary to make the statement not misleading, a person referred to
in subsection (a) of this section shall not be liable with respect
to any forward-looking statement, whether written or oral, if and to
the extent that--
(A) the forward-looking statement is--
(i) identified as a forward-looking statement, and is
accompanied by meaningful cautionary statements identifying
important factors that could cause actual results to differ
materially from those in the forward-looking statement; or
(ii) immaterial; or
(B) the plaintiff fails to prove that the forward-looking
statement--
(i) if made by a natural person, was made with actual
knowledge by that person that the statement was false or
misleading; or
(ii) if made by a business entity; \1\ was--
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\1\ So in original. The semicolon probably should be a comma.
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(I) made by or with the approval of an executive
officer of that entity; and
(II) made or approved by such officer with actual
knowledge by that officer that the statement was false
or misleading.
(2) Oral forward-looking statements
In the case of an oral forward-looking statement made by an
issuer that is subject to the reporting requirements of section
78m(a) of this title or section 78o(d) of this title, or by a person
acting on behalf of such issuer, the requirement set forth in
paragraph (1)(A) shall be deemed to be satisfied--
(A) if the oral forward-looking statement is accompanied by
a cautionary statement--
(i) that the particular oral statement is a forward-
looking statement; and
(ii) that the actual results might differ materially
from those projected in the forward-looking statement; and
(B) if--
(i) the oral forward-looking statement is accompanied by
an oral statement that additional information concerning
factors that could cause actual results to materially differ
from those in the forward-looking statement is contained in
a readily available written document, or portion thereof;
(ii) the accompanying oral statement referred to in
clause (i) identifies the document, or portion thereof, that
contains the additional information about those factors
relating to the forward-looking statement; and
(iii) the information contained in that written document
is a cautionary statement that satisfies the standard
established in paragraph (1)(A).
(3) Availability
Any document filed with the Commission or generally disseminated
shall be deemed to be readily available for purposes of paragraph
(2).
(4) Effect on other safe harbors
The exemption provided for in paragraph (1) shall be in addition
to any exemption that the Commission may establish by rule or
regulation under subsection (g) of this section.
(d) Duty to update
Nothing in this section shall impose upon any person a duty to
update a forward-looking statement.
(e) Dispositive motion
On any motion to dismiss based upon subsection (c)(1) of this
section, the court shall consider any statement cited in the complaint
and any cautionary statement accompanying the forward-looking statement,
which are not subject to material dispute, cited by the defendant.
(f) Stay pending decision on motion
In any private action arising under this chapter, the court shall
stay discovery (other than discovery that is specifically directed to
the applicability of the exemption provided for in this section) during
the pendency of any motion by a defendant for summary judgment that is
based on the grounds that--
(1) the statement or omission upon which the complaint is based
is a forward-looking statement within the meaning of this section;
and
(2) the exemption provided for in this section precludes a claim
for relief.
(g) Exemption authority
In addition to the exemptions provided for in this section, the
Commission may, by rule or regulation, provide exemptions from or under
any provision of this chapter, including with respect to liability that
is based on a statement or that is based on projections or other
forward-looking information, if and to the extent that any such
exemption is consistent with the public interest and the protection of
investors, as determined by the Commission.
(h) Effect on other authority of Commission
Nothing in this section limits, either expressly or by implication,
the authority of the Commission to exercise similar authority or to
adopt similar rules and regulations with respect to forward-looking
statements under any other statute under which the Commission exercises
rulemaking authority.
(i) Definitions
For purposes of this section, the following definitions shall apply:
(1) Forward-looking statement
The term ``forward-looking statement'' means--
(A) a statement containing a projection of revenues, income
(including income loss), earnings (including earnings loss) per
share, capital expenditures, dividends, capital structure, or
other financial items;
(B) a statement of the plans and objectives of management
for future operations, including plans or objectives relating to
the products or services of the issuer;
(C) a statement of future economic performance, including
any such statement contained in a discussion and analysis of
financial condition by the management or in the results of
operations included pursuant to the rules and regulations of the
Commission;
(D) any statement of the assumptions underlying or relating
to any statement described in subparagraph (A), (B), or (C);
(E) any report issued by an outside reviewer retained by an
issuer, to the extent that the report assesses a forward-looking
statement made by the issuer; or
(F) a statement containing a projection or estimate of such
other items as may be specified by rule or regulation of the
Commission.
(2) Investment company
The term ``investment company'' has the same meaning as in
section 80a-3(a) of this title.
(3) Going private transaction
The term ``going private transaction'' has the meaning given
that term under the rules or regulations of the Commission issued
pursuant to section 78m(e) of this title.
(4) Person acting on behalf of an issuer
The term ``person acting on behalf of an issuer'' means any
officer, director, or employee of such issuer.
(5) Other terms
The terms ``blank check company'', ``rollup transaction'',
``partnership'', ``limited liability company'', ``executive officer
of an entity'' and ``direct participation investment program'', have
the meanings given those terms by rule or regulation of the
Commission.
(June 6, 1934, ch. 404, title I, Sec. 21E, as added Pub. L. 104-67,
title I, Sec. 102(b), Dec. 22, 1995, 109 Stat. 753.)
References in Text
This chapter, referred to in subsecs. (c)(1), (f), and (g), was in
the original ``this title''. See References in Text note set out under
section 78a of this title.
Effective Date
This section not to affect or apply to any private action arising
under this chapter or title I of the Securities Act of 1933 (15 U.S.C.
77a et seq.), commenced before and pending on Dec. 22, 1995, see section
108 of Pub. L. 104-67, set out as an Effective Date of 1995 Amendment
note under section 77l of this title.
Construction
Nothing in section to be deemed to create or ratify any implied
right of action, or to prevent Commission, by rule
