A group of investors who bought American Express (AE) stock between 1999 and 2001 sued the company and its executives for securities fraud by misleading investors. Plaintiffs contend that AE over-invested in high-yield debt (junk bonds), resulting in the company losing hundreds of millions of dollars in 2000 and 2001. The investors' claim was largely based on a 10-Q report AE filed with the SEC in May 2001 stating that while it lost $182 million from its high-yield debt investments in the first quarter of 2001, it expected future losses from the investments to be lower. The company later realized that the losses were larger than reported and, in July, announced a further $826 million loss due to writedowns of the junk bonds, which caused AE stock to fall.

1. Would the result be different if plaintiffs could show that by the time of the May filing the executives had materials in hand showing worse losses than reported?
2. If a report is filled with cautionary statements about the future, does that provide strong protection to a company and its executives against such claims?