Opinion ID: 350232
Heading Depth: 2
Heading Rank: 2

Heading: Earnings Disclosure

Text: 37 The SEC asserts that in the course of his meeting with Wien and Clancy, Schuman improperly divulged an annual earnings estimate of $3-$5. Judge Ward characterized the SEC's evidence that such information had been disclosed as not convincing. We agree. Schuman's testimony was that, in response to an inquiry at the outset of the Brokaw interview, he conveyed Sanders's prediction of $5 per share, without commenting on its accuracy. Schuman then vehemently disclaimed that B & L itself was able to predict Soflens prospects. He found the high expectations reflected by analysts' earnings estimates, which Schuman believed were in the range of $4 to $10, a source of annoyance because they were pressuring B & L's stock prices and encouraging wide publicity of negative research reports on soft contact lenses. He pleaded for analysts to be more conservative. This evidence amply justified the trial court's conclusion that Schuman had not indicated the Sanders estimate was too high, but simply expressed his desire that all analysts including those making estimates both higher and lower than Sanders be more restrained. 38 Nor can the SEC's allegation that Schuman rejected a $3 earnings estimate withstand scrutiny. The incident occurred later in the Brokaw interview, when Wien and Clancy, attempting strenuously to convince Schuman to adopt a consumer-oriented public relations technique, suggested sardonically that if the course they urged were not taken, B & L's earnings for the year might drop as low as $3 per share. Schuman sarcastically inquired why they had not chosen a lower figure, for example $1, to emphasize their point. From this testimony, Judge Ward properly found that Schuman had not commented on the validity of the $3 estimate, but had merely expressed his anger with the aggressive tactics of the analysts. 39 Similarly, the evidence simply does not support the claim that Schuman told the interviewers B & L was in the process of revising its internal earnings estimate downward. In fact, Schuman testified he revealed only that B & L was preparing its quarterly forecast, a routine budgeting practice. Contrary to the Commission's assertions, he did not say that the forecast was being revised downward, nor did he hint at the magnitude of the projected figures. 40 These basic facts impel us to agree with the district court's conclusion that Schuman did not make any statements that could be characterized as either a disclosure of earnings or material. It can hardly be gainsaid that a reasonable investor would not have attached any significance in making an investment decision concerning B & L to the fact that Schuman wished analysts were more conservative, or that he considered aggressive analysts annoying, or that B & L was engaged in a routine budgeting procedure.