Resurrecting the Dodo: The Unfortunate Re-Emergence of the Puffery Defense in Private Securities Actions

The conventional wisdom is that the puffery defense is inapplicable in securities regulation. However, appellate courts in almost every federal circuit have recently used the puffery defense to dismiss private securities fraud actions that were based on vague statements of corporate optimism. This Article demonstrates that the courts have misused the puffery defense and have improperly insulated companies from liability for their misrepresentations. It contends that the assumptions justifying the use of the puffery defense are not present in securities transactions and that the federal securities laws have expressly rejected the very doctrine underlying the puffery defense-caveat emptor. Arguing that the courts have erroneously substituted the puffery defense for a full materiality analysis, this Article offers a framework for addressing the materiality of vague statements of corporate optimism.