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Professor Couture Publishes Essay on Responding to Market Rumors

November 02, 2018

Professor Couture Publishes Essay on Responding to Market Rumors

Professor Wendy Gerwick Couture, along with 23 other corporate and securities law scholars from across the country, recently participated in a symposium issue of the SMU Law Review commemorating the 50th anniversary of SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir. 1968). Her essay, titled “Texas Gulf Sulphur: A Case Study on Responding to Market Rumors,” analyzes an issue that companies continue to face today: whether, and how, to respond to market rumors. The essay analyzes the countervailing incentives that influence whether companies respond to market rumors, applies those pressures to the facts of Texas Gulf Sulphur, and concludes that counsel today would likely advise similarly situated companies to remain silent rather than respond to market rumors. Drawing therefrom, the essay argues that silence is not the socially optimal response and that the dueling pressures on companies should be adjusted to incentivize companies to respond to market rumors. Professor Couture’s essay is available here, and the full symposium issue is available here.

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