Securities law, staleness, Federal Securities Code


This note addresses the Federal Securities Code ("Code"), developed by the American Law Institute ("ALI"). It specifically focuses on the underlying policy of continuous disclosure implemented by the Code, which requires companies to register once and then continuously disclose to the securities marketplace important developments on their financial position. This note poses a question: "At what point does financial information become stale?" It focuses on the nature of stale financial information by reviewing the treatment of staleness in common law fraud and bankruptcy cases. It then analyzes the approach taken with regard to stale financial information in existing securities law. Finally, it concludes by proposing that an objective definition of staleness should be incorporated into the Code, placing reasonable limits on the liability created under the Code's continuous disclosure requirements.



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