Unmasking Confidential Witnesses?

Law360, New York (June 23, 2010, 11:59 AM EDT) -- One hotly debated issue in securities law jurisprudence is reliance in a complaint upon information from supposed “confidential witnesses.” Plaintiffs frequently use these anonymous sources to try to bolster their allegations, especially scienter allegations.

Since the United States Supreme Court’s decision in Tellabs Inc. v. Makar Issues & Rights Ltd.,[1] and the Seventh Circuit Court of Appeals’ decision in Higginbotham v. Baxter International Inc.,[2] the Circuits have come closer to reconciling the treatment of confidential witnesses.

There is general agreement that plaintiffs may rely on confidential...
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