Document Type


Publication Date



This Article critically analyzes the judicial decisions and reasoning of the United States Supreme Court and lower courts accepting certain defenses in securities fraud litigation. This Article develops how and why the core notions of materiality of information and the reasonable investor should be revised in light of recent empirical data, experimental evidence, and theoretical models of moody investing. This Article proposes modifying three recent developments in materiality doctrine to take into account moody investing. In particular, this Article argues that current judicial treatment of puffery is flawed because it neglects the power of puffery to alter moods. This Article also recommends modifying the judicial "total mix" analysis of the materiality of information to include a "total affect" analysis of information. Finally, this Article proposes refining the judicially created so-called "bespeaks caution" doctrine and statutory safe harbors codifying it to inquire whether so-called "meaningful cautionary language" is infused with affect.


Moody Investing, materiality, reasonable investor, securities regulation, puffery, total mix of information, bespeaks caution doctrine

Publication Title

Supreme Court Economic Review

Publication Citation

13 Sup. Ct. Econ. Rev. 99 (2005)