Haynes and Boone's Newsroom
Tellabs, Inc. v. Makor Issues & Rights, Ltd.
06/25/2007
David A. Dodds
Supreme Court Tightens Standard For Pleading Scienter In Securities Fraud Cases
The United States Supreme Court’s decision last week in Tellabs, Inc. v. Makor Issues & Rights, Ltd. tightened the scienter pleading standard for federal securities fraud complaints. In an 8-1 decision, the Court interpreted the “strong inference” requirement for pleading scienter under the Private Securities Litigation Reform Act (“PSLRA”) as requiring an inference that is more than merely “plausible” or “reasonable”—it must be “cogent and at least as compelling as any opposing inference of nonfraudulent intent.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., No. 06-484 (June 21, 2007).