In this post yesterday, John Jenkins took aim at issuer's that characterize themselves as "leading". He notes that the SEC Staff has and continues to comment on such characterizations. I think that in some cases these comments are a waste of time and do not protect investors because the present participle "leading" amounts to little more than an opinion and/or puffery.
InOmnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 135 S. Ct. 1318, 191 L. Ed. 2d 253, 575 US 175 (2105), the U.S. Supreme Court held that "a sincere statement of pure opinion is not an 'untrue statement of material fact,' regardless whether an investor can ultimately prove the belief wrong". The statement that XYZ corporation is a "leading manufacturer of widgets" is devoid of any embedded facts because it is so vague . "Leading" in what respect - size, innovation, ESG or something else? Further, a company can be a leading company without beingthe leader. Compare Justice Kagan's specific example of an opinion that includes an embedded fact: "I believe our TVs have the highest resolution available because we use a patented technology to which our competitors do not have access."
Claims of leadership should also be treated as non-actionable puffery. Given their indefiniteness, they generally cannot be proven right or wrong. More importantly, it is strains credulity that any reasonable investor would rely upon such a statement when making a decision to invest.
The issuer's exact statement could, of course, make a difference. It is one thing for an issuer to opine that it is "a leading exporter of widgets" and quite another for it to opine that it is "the leading exporter of widgets in the United States by units shipped".
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