TLDR
The three words that create the most press release liability are 'guaranteed,' 'will,' and 'proprietary' when used to describe future performance, uncommitted transactions, or unverified technology claims. Every press release should be reviewed against your most recent 10-K or 10-Q for consistency. Regulation FD makes selective disclosure in press releases an independent violation.
The Three Words: Guaranteed, Will, and Proprietary
During my years in the SEC Division of Enforcement, I reviewed hundreds of press releases as part of securities fraud investigations. Over time, I identified a pattern that proved remarkably consistent: three words appeared with disproportionate frequency in press releases that ultimately became evidence in enforcement actions. Those words are "guaranteed," "will," and "proprietary." Each of these words, when used carelessly in a press release, creates a specific form of liability that issuers rarely anticipate.
"Guaranteed" is the most obviously dangerous because it implies a promise of certainty that securities law recognizes as almost never supportable. When a company's press release states that an investment "guarantees" returns, that a partnership "guarantees" market access, or that a technology "guarantees" results, the issuer has made a factual representation that enforcement will test against actual outcomes. If the guaranteed outcome does not materialize, the press release becomes the primary evidence of a material misrepresentation, and the issuer's intent becomes the only question enforcement needs to resolve.
"Will" is more subtle and more common. Issuers use "will" habitually to describe events that are expected, anticipated, or hoped for but not yet certain. "The company will close the acquisition in Q2" is a statement of certainty. "The company expects to close the acquisition in Q2, subject to customary closing conditions" is a forward-looking statement with appropriate qualification. The difference between these two sentences is the difference between a defensible press release and one that creates enforcement exposure if the acquisition does not close on schedule. The habit of substituting "will" for "expects to" is one of the most preventable sources of press release liability.
"Proprietary" creates a different category of risk. When a company describes technology, processes, or methodologies as "proprietary," it is representing that the company owns something unique that provides competitive advantage. Enforcement flags this word because investigation frequently reveals that the "proprietary" technology was licensed, the "proprietary" process is industry-standard, or the "proprietary" methodology has no independent verification. In AI and technology companies particularly, the use of "proprietary" in press releases often exceeds what the company's intellectual property portfolio can support.
Regulation FD: The Rule That Changed Press Releases Forever
Regulation FD, adopted by the SEC in 2000, fundamentally changed the legal framework governing press releases. Before Reg FD, companies routinely provided material information to analysts and institutional investors before making it available to the general public. Press releases were a communication tool but not a regulatory obligation. Reg FD made simultaneous public disclosure a requirement: when a public company discloses material nonpublic information to anyone on the enumerated list of recipients, it must simultaneously make that information available to all investors.
The practical consequence of Reg FD is that every press release must be evaluated for selective disclosure risk. If a press release provides financial guidance, transaction updates, or operational milestones to analysts before the release is broadly disseminated, the company has violated Reg FD regardless of the press release's accuracy. The violation is in the timing and selectivity of the disclosure, not in the content. This means that the logistics of press release distribution are as important as the substance.
Companies that maintain regular analyst communication programs face particular Reg FD exposure because the line between public and selective disclosure becomes blurred. A phone call with an analyst before a press release is issued, a preview of quarterly results to a major shareholder, or an informal update to a board member who trades on the information -- each of these common practices can create an independent Reg FD violation that compounds any other issues with the press release itself.
The Consistency Trap: Press Releases vs. SEC Filings
The consistency between press releases and SEC filings is one of the first things enforcement examines in any investigation. When a company's press release describes the business, its prospects, or its financial condition in terms that are materially different from its most recent 10-K or 10-Q, enforcement has two simultaneous problems to investigate: is the press release misleading, or is the SEC filing deficient? Either way, the inconsistency creates liability.
The most common consistency failures involve revenue descriptions, customer claims, and technology capabilities. A press release might describe "rapid revenue growth" when the most recent 10-K reports declining revenue. A press release might announce a "major customer win" when the 10-K does not identify the customer as material. A press release might describe "next-generation AI capabilities" when the 10-K describes the technology in much more modest terms. Each of these inconsistencies creates a question that enforcement will pursue: which document is accurate?
The pre-release review protocol should include a specific step where securities counsel compares every material claim in the press release against the corresponding disclosure in the most recent periodic filing. If the press release describes the company more favorably than the SEC filing, either the press release needs to be moderated or the next SEC filing needs to be updated to reflect the same information. Consistency between public communications and regulatory filings is not optional -- it is a fundamental compliance obligation that enforcement takes seriously.
Forward-Looking Statements: When Safe Harbors Fail
The Private Securities Litigation Reform Act of 1995 created a safe harbor for forward-looking statements in certain SEC filings, but the protection is narrower than most issuers realize and provides limited coverage for press release statements. The safe harbor requires both the identification of the statement as forward-looking and meaningful cautionary language that identifies specific factors that could cause actual results to differ materially from the projection. Boilerplate cautionary language does not satisfy this requirement.
Press releases frequently include forward-looking statement disclaimers copied from SEC filings, but these disclaimers provide less protection in the press release context for several reasons. First, many press releases are oral statements when read aloud at conferences or quoted in interviews, and the safe harbor has different requirements for oral statements. Second, press releases reach retail investors who may not read or understand cautionary language. Third, courts have held that meaningful cautionary language must address the specific risks relevant to the specific forward-looking statement, not just generic business risks.
The practical implication is that issuers cannot rely on forward-looking statement disclaimers to immunize promotional press release claims. If a press release makes a specific revenue projection, the cautionary language must identify specific, concrete factors that could cause actual revenue to differ from the projection. Generic language about "market conditions," "competitive factors," and "economic uncertainty" does not satisfy the specificity requirement. Enforcement routinely strips away boilerplate cautionary language and evaluates the underlying forward-looking statement on its own merits.
When Investor Relations Firms Cross the Line
Investor relations firms and stock promoters play a significant role in press release preparation for many public companies, particularly microcap and emerging growth issuers. While professional investor relations services can add value by ensuring press releases are newsworthy and well-structured, the line between effective communication and promotional manipulation is frequently crossed. When it is crossed, the issuer bears the liability regardless of who drafted the press release.
The most problematic pattern is when IR firms draft press releases designed to increase stock price or trading volume rather than to provide accurate disclosure. These releases use superlatives ("groundbreaking," "unprecedented," "revolutionary"), imply certainty about uncertain outcomes, and frame ordinary business developments as extraordinary achievements. When enforcement investigates, the drafting history -- including communications between the IR firm and the issuer about the release's intended market impact -- becomes evidence of the issuer's intent to manipulate rather than to disclose.
Companies retaining IR firms for press release assistance should require that all draft releases be reviewed by securities counsel before distribution, prohibit the IR firm from issuing any communication on behalf of the company without prior written approval, and include provisions in the IR engagement agreement requiring compliance with securities laws. These contractual protections do not eliminate the issuer's liability, but they create a compliance framework that demonstrates good faith.
Social Media as Press Release: The Expanding Definition
The SEC has made clear through enforcement actions and interpretive guidance that social media posts by company officers can constitute public disclosure subject to the same legal standards as formal press releases. The seminal case involved a CEO who disclosed material information about the company's financial performance on social media before making the information available through traditional channels. The SEC's position is that the medium of communication does not determine the legal obligations -- the materiality of the information does.
This expansion of the press release concept creates significant compliance challenges for public companies. A CEO's tweet about a pending deal, a CFO's LinkedIn post about quarterly results, or a board member's social media comment about the company's strategic direction can each trigger Regulation FD analysis, antifraud scrutiny, and filing consistency review. Companies that do not have social media policies governing officer communications about the company are operating without a critical compliance safeguard.
Effective social media policies for public company officers should include: a prohibition on disclosing material nonpublic information through social media, a requirement for securities counsel review of social media posts that discuss the company's business, financial condition, or prospects, clear guidelines distinguishing between personal opinions and company communications, and training on Regulation FD obligations in the social media context.
The Pre-Release Review Protocol
Based on my experience in SEC enforcement, the most effective defense against press release liability is a documented pre-release review protocol that ensures every press release is evaluated for accuracy, consistency, and compliance before distribution. This protocol does not need to be complex, but it does need to be followed consistently. Enforcement is far more lenient with companies that have and follow compliance procedures than with companies that have no procedures or selectively follow them.
The pre-release review should include five specific steps. First, factual verification: every material claim in the press release must be verified against underlying documentation. Second, filing consistency: every description of the company, its business, its technology, and its financial condition must be compared against the most recent 10-K or 10-Q. Third, Regulation FD analysis: the timing and distribution of the release must be evaluated for selective disclosure risk. Fourth, forward-looking statement review: any projections or predictions must be evaluated for appropriate cautionary language. Fifth, authorized approval: the release must be approved by an officer authorized to speak for the company on the subject matter.
The cost of implementing this protocol is negligible under a flat-fee engagement. Securities counsel can review a standard press release in 30 to 60 minutes, and the review becomes faster over time as counsel becomes familiar with the company's business and filing history. Compare this cost against the average cost of defending a press release enforcement action, which routinely exceeds $500,000, and the return on investment is extraordinary. Companies that build pre-release review into their communication workflow eliminate the most preventable category of securities enforcement exposure.
Enforcement Patterns and Trends
Press release enforcement actions have increased measurably over the past decade, driven by several converging factors. The proliferation of social media has expanded the volume of public company communications subject to antifraud analysis. The growth of cannabis, cryptocurrency, and AI industries has brought new issuers into the public markets with less experience in securities disclosure. And the SEC's increasing use of data analytics has made it easier to identify inconsistencies between press releases and SEC filings.
The industries receiving the most press release enforcement scrutiny are cannabis, cryptocurrency, AI, and biotech. These sectors share common characteristics that make press release compliance particularly challenging: rapidly evolving technology or regulatory environments that create temptation to overstate current capabilities, retail investor bases that may be less sophisticated in evaluating promotional claims, limited analyst coverage that would otherwise serve as a check on exaggerated press release language, and competitive pressure to match or exceed competitors' promotional communications.
The trend in enforcement is unmistakable: the SEC is treating press releases with the same seriousness as SEC filings. Companies that continue to view press releases as marketing documents rather than compliance obligations are operating with a framework that no longer matches regulatory reality. Every press release is a potential enforcement exhibit. The question is whether it will be an exhibit demonstrating compliance or an exhibit demonstrating liability.
10 Key Points
- 1.The three words that create the most press release liability are 'guaranteed,' 'will,' and 'proprietary' when used to describe future performance, uncommitted transactions, or unverified technology claims. Each of these words implies certainty that securities law requires issuers to qualify.
- 2.Regulation FD makes selective disclosure in press releases an independent securities violation. If a press release discloses material information to certain investors before it is publicly available to all investors, the issuer has violated Reg FD regardless of the press release's other content.
- 3.Press releases must be consistent with your most recent SEC filings. When enforcement compares a company's press release language against its 10-K or 10-Q and finds material inconsistencies, the company faces liability under both the antifraud provisions and its reporting obligations.
- 4.The Private Securities Litigation Reform Act's safe harbor for forward-looking statements applies to SEC filings but provides limited protection for oral statements and press releases. Issuers cannot rely on boilerplate cautionary language to immunize promotional press release claims.
- 5.Investor relations firms and stock promoters frequently draft or influence press releases in ways that create securities liability for the issuer. The issuer remains responsible for every word in its press release regardless of who drafted it.
- 6.Social media posts by company officers are increasingly treated as press releases by enforcement. A CEO's tweet about a pending deal, customer win, or revenue milestone triggers the same Regulation FD and antifraud analysis as a formal press release.
- 7.Every press release should be reviewed by securities counsel against the company's most recent periodic filing before issuance. The review should specifically compare claims, projections, and material statements for consistency with SEC disclosure.
- 8.Press release enforcement actions have increased significantly in cannabis, AI, cryptocurrency, and other emerging industries where issuers tend to use more promotional language and face less analyst scrutiny to check exaggerated claims.
- 9.The most dangerous press releases are the ones that announce transactions, partnerships, or achievements that have not yet been consummated. Announcing a 'signed agreement' when only a non-binding letter of intent exists is a common enforcement trigger.
- 10.Building a pre-release review protocol that includes securities counsel review, filing consistency check, and Regulation FD analysis costs a fraction of what a single press release enforcement action costs to defend.
Frequently Asked Questions
Are press releases considered SEC filings?
Press releases are generally not SEC filings, but they can become incorporated into SEC filings by reference or through Form 8-K filing requirements. More importantly, press releases are subject to the antifraud provisions of the securities laws regardless of whether they are technically SEC filings. This means that material misrepresentations or omissions in press releases create the same liability exposure as misstatements in SEC filings.
What makes the word 'guaranteed' dangerous in press releases?
The word 'guaranteed' implies a level of certainty about future outcomes that is almost never supportable in securities disclosure. When a press release states that returns are 'guaranteed,' that a transaction 'guarantees' growth, or that a technology 'guarantees' results, the issuer has made a representation that enforcement can compare against actual outcomes. If the guaranteed outcome does not materialize, the press release becomes evidence of a material misrepresentation.
How does 'will' create liability compared to 'expects' or 'anticipates'?
The word 'will' expresses certainty about future events, while 'expects,' 'anticipates,' and 'believes' express probability or opinion. This distinction matters because definitive forward-looking statements receive less protection under the safe harbor provisions. 'The company will generate $10 million in revenue' is a guarantee that creates liability if not achieved. 'The company expects to generate approximately $10 million in revenue' is a forward-looking statement that, with appropriate cautionary language, receives greater legal protection.
Why is 'proprietary' flagged by enforcement?
The word 'proprietary' in press releases often implies that the company owns unique technology, processes, or intellectual property that provides competitive advantage. Enforcement flags this word because issuers frequently use 'proprietary' to describe technology they have licensed, processes that are industry-standard, or capabilities that have not been independently verified. If the 'proprietary' claim cannot be substantiated through patent filings, trade secret documentation, or independent verification, it creates enforcement exposure.
What is Regulation FD and how does it apply to press releases?
Regulation FD (Fair Disclosure) requires that when a public company discloses material nonpublic information to certain individuals such as analysts, institutional investors, or shareholders, it must simultaneously disclose that information publicly. Press releases are the most common mechanism for Reg FD compliance, but they can also create Reg FD violations if they selectively provide material information to certain audiences before broad public dissemination.
Can a CEO's social media post be treated as a press release?
Yes. The SEC has made clear through enforcement actions and guidance that social media posts by company executives can constitute public disclosure and are subject to the same antifraud provisions as formal press releases. A CEO's tweet, LinkedIn post, or other social media communication about material company developments triggers Regulation FD analysis, antifraud scrutiny, and filing consistency review.
What should a pre-release review protocol include?
A comprehensive pre-release review protocol should include: securities counsel review of all factual claims for accuracy and materiality, comparison of press release statements against the company's most recent 10-K or 10-Q for consistency, Regulation FD analysis to ensure no selective disclosure, forward-looking statement review to ensure appropriate cautionary language, and a final sign-off by an officer authorized to approve public communications.
How do press releases interact with Form 8-K filing requirements?
Certain press release announcements may trigger independent Form 8-K filing obligations. For example, announcing a material definitive agreement, a change in officers, or a financial restatement in a press release does not satisfy the Form 8-K filing requirement. The press release and the Form 8-K must be consistent, and the 8-K must be filed within the required timeframe regardless of whether a press release was issued.
What is the liability exposure for a misleading press release?
Liability for a misleading press release can include SEC enforcement action with civil penalties and disgorgement, private securities litigation under Rule 10b-5, personal liability for officers who approved the release, reputational damage affecting future capital-raising ability, and potential criminal referral in egregious cases. The total cost of defending and resolving a press release enforcement action routinely exceeds $500,000.
How do I handle press releases about partnerships or agreements?
Press releases about partnerships and agreements should distinguish clearly between binding definitive agreements and non-binding letters of intent, term sheets, or memoranda of understanding. The release should state exactly what has been signed, what conditions remain to closing, and what the material terms are. Announcing a 'partnership' when only preliminary discussions have occurred is one of the most common press release enforcement triggers.
Should press releases include financial projections?
Financial projections in press releases should be approached with extreme caution. If included, they must be clearly identified as forward-looking statements, accompanied by meaningful cautionary language identifying specific factors that could cause actual results to differ, and consistent with any projections or guidance provided in SEC filings. Press release projections that are more optimistic than SEC filing guidance create an immediate consistency problem.
What industries receive the most press release scrutiny from enforcement?
Cannabis, cryptocurrency, AI, biotech, and microcap companies receive disproportionate press release scrutiny because these industries tend to use more promotional language, face less analyst coverage to check claims, and operate in regulatory environments where exaggerated capability claims are both more tempting and more consequential. Companies in these industries should assume that every press release will be reviewed by the SEC.
How do investor relations firms create press release liability?
Investor relations firms sometimes draft press releases using promotional language designed to increase stock price or trading volume rather than provide accurate disclosure. The issuer remains legally responsible for every word in its press release regardless of who drafted it. When enforcement investigates and discovers that an IR firm drafted misleading content, the issuer cannot shift liability to the firm. The issuer's obligation is to review and approve every press release for accuracy and compliance.
What is the difference between promotional and informational press releases?
An informational press release reports facts: executed agreements, reported financial results, regulatory milestones achieved, personnel changes. A promotional press release characterizes those facts: 'groundbreaking partnership,' 'unprecedented growth,' 'revolutionary technology.' Enforcement scrutinizes promotional language because it often implies qualities or outcomes that exceed what the underlying facts support. The safest press releases are factual, specific, and free of superlatives.
How does flat-fee engagement improve press release compliance?
Under hourly billing, companies often skip securities counsel review of routine press releases due to cost concerns. This creates a compliance gap where the most frequent public communications go unreviewed. Flat-fee engagement eliminates this economic barrier, ensuring that every press release receives the same level of securities counsel review regardless of frequency. Companies under flat-fee arrangements consistently produce more compliant press releases.
What should I do if a press release has already been issued with inaccurate information?
Contact securities counsel immediately. Depending on the nature and materiality of the inaccuracy, options include issuing a corrective press release, filing a Form 8-K with corrected information, providing supplemental disclosure in the next periodic filing, or in some cases, making a voluntary disclosure to the SEC. The speed of correction matters significantly to enforcement's assessment of the issuer's intent and good faith.
Can press releases create liability under state securities laws?
Yes. State securities laws, commonly known as blue sky laws, contain their own antifraud provisions that apply to public company communications including press releases. In addition, state attorneys general have independent authority to investigate and prosecute misleading press releases. Companies distributing press releases nationally should be aware that they are potentially subject to enforcement in every state where investors received the communication.
How should cannabis companies handle press releases about federal legalization prospects?
Cannabis companies should never state or imply that federal legalization is certain, imminent, or probable in press releases. The appropriate approach is to note that federal legalization legislation has been introduced, identify specific pending legislation without predicting its passage, and emphasize that the company's current operations are subject to the risk of federal enforcement regardless of state legalization status. Optimistic press releases about legalization prospects are frequently cited in enforcement actions.
How should AI companies handle press releases about technology capabilities?
AI companies should describe technology capabilities in terms of what the technology currently does, not what it is expected to do in the future. Press releases should avoid terms like 'artificial intelligence' or 'machine learning' for capabilities that are rule-based rather than AI-driven. Claims about accuracy rates, processing speeds, or performance metrics should be independently verifiable. The gap between marketing claims and actual capability is the primary enforcement focus for AI company press releases.
What documentation should be maintained for press release compliance?
Companies should maintain a complete record of: the drafting process including all draft versions and tracked changes, securities counsel review and approval, the factual basis for all material claims, filing consistency analysis comparing the release against current SEC filings, Regulation FD analysis documentation, and the final approval by an authorized officer. This documentation provides a defensible record if the press release is later questioned by enforcement.
This article was written by Frederick M. Lehrer, Esq., a former SEC Division of Enforcement Staff Attorney and Special Assistant United States Attorney (Southern District of Florida) with over 30 years of securities law experience. Florida Bar No. 888400.