Supreme Court Establishes New National Standard For Pleading Securities Fraud Cases
By Howard M. Privette, William F. Sullivan, Peter M. Stone, and Kimberly A. Donohue
On June 21, 2007, the Supreme Court ruled that a plaintiff filing a federal securities fraud complaint must do more than plead facts sufficient to support a reasonable inference that each defendant acted with scienter, or wrongful intent. In Tellabs v. Makor Issues & Rights, Ltd., No. 06-484 (June 21, 2007), an 8-1 majority of the Court resolved a split among the Circuit Courts over the interpretation of the governing statute, which mandates that a plaintiffs complaint must support a strong inference of scienter in order to survive a motion to dismiss.