Seventh Circuit upholds scienter allegations following Tellabs decision

In Tellabs Inc v Makor Issues & Rights Ltd the Supreme Court reversed and remanded to the US Court of Appeals for the Seventh Circuit a case with instructions to dismiss the complaint unless the court found it adequately alleged a "strong inference" of scienter, using the standard that...

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Bibliographic Details
Published inInsights (Clifton, N.J.) Vol. 22; no. 2; p. 8
Main Author Gray, C. Neil
Format Journal Article Trade Publication Article
LanguageEnglish
Published Englewood Cliffs Aspen Publishers, Inc 01.02.2008
Subjects
District courts
Executives
Federal court decisions
Laws, regulations and rules
Motions (Law)
Pleading
Securities fraud
State court decisions
Supreme Court decisions
United States > US
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Summary:In Tellabs Inc v Makor Issues & Rights Ltd the Supreme Court reversed and remanded to the US Court of Appeals for the Seventh Circuit a case with instructions to dismiss the complaint unless the court found it adequately alleged a "strong inference" of scienter, using the standard that "a reasonable person would deem the inference of scienter to be cogent and at least as compelling as any opposing inference one could draw from the facts alleged." The Supreme Court granted certiorari to resolve a disagreement among Circuit Courts of Appeal as to "whether, and to what extent, a court must consider competing inferences in determining whether a securities fraud complaint gives rise to a 'strong inference' of scienter." The Supreme Court's Tellabs opinion offered ways for defendants to demonstrate that plaintiffs have not pleaded a strong inference of scienter as required by the Private Securities Litigation Reform Act.
ISSN:0894-3524