When a public company purchases a significant good or service, it typically seeks competitive proposals. From coffee machines to architects, companies invite multiple vendors to bid, evaluate their proposals, and choose one based on a combination of quality and cost. Yet companies named in a securities class action frequently fail to engage in a competitive
Scienter Analysis
Cybersecurity Securities Class Actions are Coming: Predictions, Analysis, and Practical Guidance
Last fall, I wrote about board oversight of cybersecurity and derivative litigation in the wake of cybersecurity breaches. I plan to update my thoughts later this year, after we see developments in the recently filed Target and Wyndham derivative actions, and learn the results of the 2014 installment of Carnegie Mellon’s bi-annual CyLab Governance of…
Ineffective Motions to Dismiss Erode the Power of the Reform Act
In 1995, public companies and their directors and officers received one of the greatest statutory gifts in the history of American corporate law: the Private Securities Litigation Reform Act. The Reform Act established heightened standards for pleading falsity and scienter, among other protections, to allow for dismissal before discovery in a fair percentage of cases. …
Falsity is Fundamental: The Case for Emphasizing Arguments against Falsity
In defending a securities class action, a motion to dismiss is almost automatic, and in virtually all cases, it makes good strategic sense. In most cases, there are only four main arguments:
- The complaint hasn’t pleaded a false or misleading statement
- The challenged statements are protected by the Safe Harbor for forward-looking statements
- The
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Matrixx Did Not, and Could Not, Authorize Shortcuts in Reform Act Scienter Analysis, Despite Plaintiffs’ Claims to the Contrary
As I have previously written, the Sixth Circuit’s erroneous interpretation of the scienter component of the Supreme Court’s decision in Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309 (2011), is one of the biggest threats to the protections of the Private Securities Litigation Reform Act.
The resulting flawed analysis – which I …