93 Tex. L. Rev. See Also 1 (2014-2015)

handle is hein.journals/seealtex93 and id is 1 raw text is: 

Texas Law Review

See Also
Volume 93


A Reply to Mind the GAAP

Tom Fulkerson* & Nick Brown**

    In Mind the GAAP: Moving Beyond the Accountant Attorney Treaty,
author Jamie Yarbrough contends that investors are often left unprotected by
current disclosure requirements for financially material litigation.' To cure
that ill, the author proposes that issuers be required to disclose the settlement
offers they make in all material litigation, reasoning, in part, that they are
already voluntarily disclosing those assessments of the case to their
opponent.2 Unfortunately, the author applies a flawed method of evaluating
the benefits of the proposed regulatory change, supports the argument for
change by examples that contradict it, and fails to recognize the serious
negative consequences of reporting settlement offers on both the settlement
and judicial processes. A more focused application of current rules or the
creation of a presumption of fraud in the event of underreporting is more
likely to protect investors than the proposed change.

I. Do We Have A Problem?
    Rather than proving that underreporting of major litigation events and
resultant stock price changes are common, the author merely claims that the
possibility of such losses is hardly a fantasy.3  To compel change,
particularly one as potentially disruptive as the author proposes, more should

* Tom Fulkerson is the founding partner of Fulkerson Lotz LLP.
** Nick Brown clerks for the Hon. Gregg J. Costa of the United States Court of Appeals for the
Fifth Circuit and will be joining Fulkerson Lotz in the fall of 2015. Many thanks to Kelly Kirkland
for his helpful comments.
   1. Jamie L. Yarbrough, Note, Mind the GAAP: Moving Beyond the Accountant Attorney
Treaty, 92 TEXAS L. REv. 749, 749 (2014).
   2. Id. at 760.
   3. Id. at 749.

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