Sean Hackbarth on the investor suits against Krispy Kreme:
This suit stems from a company statement last week telling investors that earnings would be "10% lower than previously announced guidance." Krispy Kreme is being sued because they may have misjudged their expansion plans and not realized how much the low-carb craze would effect them. It sounds to me that this is a case of business error. There's a big difference between lying and being wrong ....It's an old, old story I'm afraid. The top empirical work on private securities litigation is being done by a law prof named Michael Perino, who has documented the existence of a "race to the courthouse," by which he means "class actions filed soon after significant stock price declines, apparently with very little pre-filing investigation" by the plaintiff lawyer. Unfortunately, he's found that the PSLRA hasn't solved the problem.