When you invest in a publicly traded company, you’re not doing it blind. That’s because securities laws require these companies to share material facts with you — facts that an investor would consider important when deciding whether to buy, hold, or sell a stock. And when that disclosure doesn’t happen, either by choice or neglect, it opens the door to serious legal consequences.
Here’s what public companies are legally required to disclose — and what happens when they don’t.
They must report accurate financials
Quarterly and annual filings are not optional — they are mandated by law and must present a full and accurate picture of a company’s financial situation. If a company provides financial projections, it must also explain the assumptions on which those projections are based. Hiding losses, inflating profits, or cutting corners isn’t just misleading — it’s also unlawful.
They must disclose known risks
Public companies must disclose significant risks that could affect their financial performance or prospects. These risks include ongoing litigation, regulatory investigations, cybersecurity incidents, or weaknesses in internal controls. You don’t need to learn about these risks after the stock tanks — you’re entitled to know before making your investment decision.
They must report significant internal changes
The company must inform you about major events, such as the resignation or appointment of key executives, mergers and acquisitions, or significant changes in control. Legally, these events require the company to file a report on Form 8-K with the Securities and Exchange Commission (SEC) promptly. If a change could impact the company’s future, you are entitled to hear about it in real time, not months later when the dust has already settled.
They cannot omit key information
Even if a company makes required filings, leaving out important information can be just as misleading as making false statements. If the missing detail may have changed how you interpreted what they disclosed, then it matters. If that omission left you with an incomplete or distorted understanding of its business prospects and you suffered financial harm as a result, you may have grounds for legal action.
If something feels off, you may have a securities claim
You don’t need to be a securities law expert to recognize when a company didn’t give you the whole picture. You may have a securities law claim if you experienced sudden investment losses and later learned that crucial information was withheld or misrepresented. Securities fraud cases move quickly and carry significant weight, which is why having a legal team committed to holding public companies accountable and recovering losses for investors is beneficial.