Posts tagged PSLRA.

Last month, the 6th Circuit joined the majority view recognizing the "materialization of the risk" theory of loss-causation as an alternative to "corrective-disclosure" in securities litigation under Rule 10b-5.

The Public Securities Litigation Reform Act ("PSLRA") and federal jurisprudence (Tw-Iqbal) require pleading specific factual allegations of each element of Rule 10b-5 claim, including loss-causation (a proximate causal relationship between not merely the alleged misrepresentation or omission and the transaction, but also the plaintiffs' loss). Dura-Pharm

Posted in: PSLRA

The US Sixth Circuit last week narrowed its standard for adequately pleading scienter in PSLRA cases using a collective-knowledge theory to impute knowledge to a corporate defendant from among various employees. In Omnicare, the Court limited collective-knowledge scienter by imposing the helpful, but unremarkable, requirement that such a pleading demonstrate a reasonably close connection between the collectively-held-knowledge and the issuance of the misstatement (or decision not to correct a prior omission). In re Omnicare, Inc. Securities Litigation, No. 13-5597 (6th

Posted in: PSLRA

In 1995, the Private Securities Litigation Reform Act ("PSLRA") was passed to limit frivolous and unwarranted securities lawsuits. 15 U.S.C. §78u-4. While private securities litigation is an indispensable tool in which defrauded investors can recover their losses, such litigation has led to nuisance filings, targeting of deep-pocket defendants, and vexatious discovery requests in attempts to, among other things, extort large settlements. See Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71 (2006). To combat these actions, the PSLRA changed the pleading ...

Posted in: SLUSA
The familiar "in connection with the purchase or sale" securities-litigation requirement may not be unlimited in its breadth, after all. On February 26, the US Supreme Court pulled up short defendants in litigation by investors in the bank CDs at the heart of Allen Stanford's Ponzi scheme. In four separate class actions (two in USDC-NDTX and two removed from Louisiana state court, but consolidated by the JPMDL) investors brought state-law securities and related claims - apparently hoping to avoid stricter Federal-law pleading requirements, and limits on private ...
Posted in: JPMDL, PSLRA, SLUSA
Tags: JPMDL, PSLRA, SLUSA
Rahman v. Kid Brands, Inc., 2013 WL 6038246 Shah Rahman, the plaintiff and appellant, brought a federal securities class action in March 2011 against defendant Kid Brands, Inc. and against individual defendants Bruce Crain, Guy Paglinco and Raphael Benaroya, officers of Kid Brands. In the Second Amended Complaint, Rahman alleged that the defendants mislead investors in Kid Brands by artificially inflating its stock price and issuing deceptive public financial reports and press releases dealing with Kid Brands' compliance with custom laws and Kid Brands' overall financial ...
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