Judge Pauley held that this disclosure was inadequate:

• [W]arnings of specific risks like those in the ARM Prospectus do not shelter defendants from liability if they fail to disclose hard facts critical to appreciating the magnitude of the risks described....

As aptly put by Judge Pollack in the context of the bespeaks caution doctrine, disclosures of risk provide

“no protection to someone who warns his hiking companion to walk slowly because there might be a ditch ahead when he knows with near certainty that the Grand Canyon lies one foot away.”  (p15)

WestLaw - Slip Copy, 2010 WL 3768146 (S.D.N.Y.) -  American International Group, Inc. 2008 Securities Litigation   --   24p