Recent SEC Guidance on Non-GAAP Financial Measures May Impact Federal Securities Lawsuits

Companies often use non-GAAP measures in financial disclosures to present unique measures or benchmarks, such as EBIT or EBITDA. Recently, however, the use of non-GAAP measures has come under fire from several commentators. Further, the SEC recently issued guidance concerning the use of non-GAAP measures.  This article addresses the current state of the law and considers how courts may weigh the SEC’s recent guidance in the event of claims that non-GAAP measures present material misstatements or misrepresentations in violation of securities laws.