Hidden crimes
Although the judge ordered the securities fraud case to go to trial, he dismissed all other charges. Those charges included the SEC’s argument that securities misrepresentations amounted to accounting errors, and that statements made in press releases and blogs also misled investors.
Engelmayer also dismissed Brown’s public statements, including those published in company-sanctioned publications, blog posts, and podcasts, “because each qualifies as disproportionate corporate arrogance, too common to cause a reasonable investor to rely on it.”
The judge said that when the SEC erred on the side of public disclosure, it “means to blame SolarWinds for not explaining these risks in detail.” But, the judge wrote, “the case law does not require more” and does not require “a company to set forth in very clear terms the circumstances in which its Internet security measures may prove inadequate. As decisions in this District have recognized, anti-fraud laws do not need warning to be clearly stated.”
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