The truth, the partial truth...and Commerce Bank

In this article (free subscription required) a federal judge rules that CEO's can issue false, but vague pieces of puffery:

Corporate CEOs can falsify, exaggerate and withhold information from
investors without necessarily breaking the law, according to a ruling
yesterday by a federal judge in Camden.
"Regardless of its falsity, a misleading statement or omission is not actionable unless it is material," U.S. District Judge Robert B. Kugler ruled in throwing out shareholders' lawsuits against Commerce Bancorp Inc.
A group of investors sued Commerce last year, alleging that chairman Vernon Hill II had violated federal securities law when he failed to warn investors about a federal bribery investigation in Philadelphia that led to the indictment of two Commerce Bank of Pennsylvania executives.
. . .When do executives' statements cross the legal line? Only when "there is a substantial likelihood that a reasonable shareholder would consider [a statement] important in deciding how to act," Kugler ruled.
And what kind of corporate statements should a reasonable shareholder ignore? Kugler cited Hill's statement, in Commerce's year-end 2003 earnings report, that despite rising interest rates, "the unique Commerce business model continues to produce strong top-line revenue growth."
The shareholders argued that Hill broke the law when he made those
statements without revealing that Commerce's "business model" allegedly
relied on bribes of local officials.
But, Kugler ruled, no "reasonable" investor would have taken Hill's words at face value in the first place. "These remarks are exactly the sort of vague, general, optimistic commentary" that the federal courts' Philadelphia-based Third Circuit "has deemed immaterial puffery," he said.
In dismissing other shareholder claims yesterday, the judge added that "Commerce
Bank's slogan, 'America's Most Convenient Bank,' and its claim to a 'unique'
business model are simply too vague and subjective to influence reasonable
investors."
Kugler agreed with the shareholders (and disagreed with Commerce
attorneys) in ruling that, when deciding whether to report "unlawful practices"
- such as the bribery Commerce was accused of - it does not matter if there is
not much money involved. He said even "illegal payments that are so small as to
be relatively insignificant to the corporation's bottom line may endanger all of
a corporation's business if they are discovered."
Yet, Kugler added, it is unreasonable to expect a company to have to detail any financial "risks" that could result from misbehavior: "Even if a corporation is engaging in illegal practices, predictions of future events such as criminal indictments are too speculative" to project.
Summing up, Kugler wrote: "The risks inherent in Commerce Bank's unsustainable illegal business practices were too speculative to be material."