Also known as:safe harbor rule · safe-harbor rule · safeharbor rules · safe harbor
Written by attorneys · grounded in primary & secondary sources — see below
A statutory or regulatory provision that shields a party from liability or exempts conduct from otherwise applicable requirements when specified conditions are satisfied. Satisfaction of the listed criteria conclusively establishes compliance or non-liability without further inquiry into surrounding facts.
Sources & Authorities· 1 primary source
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Cases
Study Supplements
How it applies
Common Examples
4
Vague Safe Harbor in Press Statements
Stephen Shaw, defense counsel in a high-profile criminal case, tells reporters that his client acted in self-defense after an altercation. The state bar charges him under a trial-publicity rule that bars statements creating a substantial likelihood of material prejudice but carves out a safe harbor for statements made "without elaboration." Because the safe-harbor language supplies no objective standard for what counts as elaboration, the court holds the rule unconstitutionally vague as applied to Shaw's largely political remarks.
Pleading Safe Harbor Under PSLRA
Sierra Santos buys shares in Tellabs after the company issues optimistic earnings guidance. When the stock later falls, she alleges fraud but supplies only general assertions about motive and opportunity. The district court dismisses the complaint because the facts pleaded fail to meet the strong-inference safe harbor Congress created in the PSLRA for scienter allegations.
Tellabs, Inc. v. Makor Issues & Rights, Ltd.551 U.S. 308 (2007)
Rebuttal of Reliance Presumption
Solomon Silver purchases Halliburton stock during the class period and later sues after corrective disclosures. Halliburton offers evidence that Silver traded solely on a tip from his broker and never relied on the integrity of the market price. The court accepts the evidence as rebutting the Basic presumption, removing Silver from the class under the safe-harbor framework for individualized reliance challenges.
Halliburton Co. v. Erica P. John Fund, Inc.573 U.S. 258, 268 (2014)
Tippee Safe Harbor for Non-Beneficial Disclosure
Sebastian Santos receives material nonpublic information from a corporate insider who expects no personal benefit. Santos trades on the information and is later sued by the SEC. Because the insider's disclosure lacked the personal-benefit element required for tipper liability, the court holds that Santos falls within the Dirks safe harbor and incurs no derivative liability.
Dirks v. Securities and Exchange Commission463 U.S. 646, 655, n.14 (1983)
Common questions
Frequently Asked
1
What conditions must be met to invoke the 25 percent safe harbor for asset dispositions?+
A corporation retains a significant continuing business only if the retained activity equals at least 25 percent of total assets and at least 25 percent of revenues or pre-tax operating income from continuing operations for the most recent fiscal year. If those thresholds are not satisfied, shareholder approval is required for the disposition.
Supporting sources
463 U.S. 646, 655, n.14 (1983)Business Associations
…quoted ante , at 661, n. 21. This position is in apparent conflict with the statement in its brief that speaks favorably of a safe harbor rule under which an investor satisfies his obligation to disclose by reporting the information to the Commission and then waiting a set period before trading. Brief for Respondent 43-44. The…