SCOTUS to Hear Argument in PSLRA Case Aimed at Resolving Circuit Split
Cornell's LII Bulletin has offered the following preview of next week's oral argument in Tellabs, Inc. v. Makor Issues & Rights, LTD (06-484):
SECURITIES FRAUD, PRIVATE SECURITIES LITIGATION REFORM ACT,
Tellabs, Inc. v. Makor Issues & Rights, LTD (06-484)
Oral argument: March 28, 2007
The Private Securities Litigation and Reform Act of 1995 was passed by Congress in 1995 in an effort to create clear guidelines for the prosecution of cases involving securities fraud. However, circuit courts have been divided over how to interpret the Act's language regarding the type of proof required to withstand a motion for dismissal. This case addresses the differing interpretive approaches taken by the circuit courts. Tellabs, Inc. argues that, for a suit to go forward, the evidentiary standard set out by the PSLRA requires that plaintiffs show a "high likelihood" that the defendant acted with scienter, i.e., knowledge and intention to break the law. It argues that Makor Issues & Rights failed to make the requisite allegations of specific facts necessary to sustain its case. Makor counters that its complaint was sufficiently detailed to establish a reasonable inference that the defendants knew they were breaking the law. The Supreme Court's decision in this case will establish a uniform interpretation of the type and extent of evidence necessary under the PSLRA to sufficiently allege that a defendant has acted with scienter.
The full version of this preview is available at http://www.law.cornell.edu/supct/cert/06-484.html