Thursday, June 18, 2009
THE KAYFABE DEFENSE: For your first question in the ALOTT5MA Securities Regulation Final Exam, please discuss the following fact pattern (all real). On Monday night's live television broadcast of its RAW program, World Wrestling Entertainment (WWE) announces that it has sold its "RAW" brand to Donald Trump. WWE issues a press release the following day announcing the deal, and multiple media sources pick up the story. WWE's stock drops almost 10% that day. WWE subsequently clarifies that the press release was merely "promotional for that ongoing story arc." Let's assume that there was no active wrongdoing by WWE employees in shorting the stock or otherwise. Is "everyone knows wrestling is fake" a valid legal defense to any securities claims that might be asserted by the SEC or a class action? Should it be?
Posted by Matt at 5:30 PM