Law360, New York (January 12, 2009) -- Both before and after the enactment of the Private Securities Litigation Reform Act of 1995 (PSLRA), courts have held that a factor militating in favor of sufficiently pleading a defendant’s scienter in an action for open market securities fraud under Rule 10b-5 is unlawful insider trading by the defendant (or, in the case of a corporate defendant, by senior management responsible for the corporate disclosures).
For example, the court should evaluate whether the plaintiff has alleged that the defendant wrongfully sold company stock when the price of that stock allegedly was deceptively inflated. To contribute...
