- Category
- Client Alerts
- Date
- June 01, 2009
- Title
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Securities Litigation Alert: Third Circuit Reiterates Standards to Evaluate the Use of Confidential Informants Post-Tellabs; Court Finds Motive and Opportunity No Longer Sufficient in Alleging Scienter
The Court of Appeals for the Third Circuit recently held, in Institutional Investors Group v. Avaya, Inc., that the Supreme Court’s decision in Tellabs, Inc. v. Makor Issues & Rights, Ltd. did not change existing law on the use of confidential witnesses to meet the pleading requirements of the Private Securities Litigation Reform Act ("PSLRA"). The Court reaffirmed its holding in Cal. Pub. Employees’ Ret. Sys. v. Chubb Corp. The Avaya court also held that after Tellabs, allegations of a defendant’s motive and opportunity to commit fraud are no longer sufficient to give rise to the "strong inference" of scienter that the PSLRA requires.
Related People
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Alan R. Friedman
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- Counsel
- Author
- New York
- vcard
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Arthur H. Aufses III
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- Counsel
- Author
- New York
- vcard
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