Pleading Scienter In Securities Fraud Class Actions

Law360, New York (July 27, 2009, 1:40 PM EDT) -- The subprime mortgage crisis has prompted an array of lawsuits alleging violations of the Securities Exchange Act of 1934 (“Exchange Act”) and SEC Rule 10-b5.

This article analyzes overlapping issues in the pleading of scienter that were decided in recent rulings on 12(b)(6) motions brought to dismiss securities fraud class action claims.

The analysis revolves around four cases[1], each of which features a defendant whose business was involved in subprime mortgage financing — typically loan origination and debt securitization. The plaintiffs in each case alleged violations...
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