The Trouble With 'Confidential Witness' Allegations

Law360, New York (February 3, 2012, 2:12 PM EST) -- Despite a statutory requirement that plaintiffs in securities cases plead fraud with a high degree of particularity, the key allegations of wrongdoing in many complaints are attributed to unnamed "confidential witnesses." "CW" allegations are not justified by sound public policy, and they are subject to abuse: there have been occasions when allegations attributed to CWs turn out to be unsubstantiated when the witnesses themselves are eventually cross-examined.

Even where CW allegations are true, the cloak of secrecy surrounding them makes the search for truth more complicated and expensive than it should be. Perhaps it is time for courts to re-examine this...

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