Ruling Tightens Rein On Securities Fraud Plaintiffs

Law360 (August 9, 2007, 12:00 AM EDT) -- On July 27, 2007, the United States Court of Appeals for the Seventh Circuit issued its first opinion interpreting the Supreme Court's ruling in Tellabs Inc. v. Makor Issues & Rights Ltd., 127 S. Ct. 2499 (July 21, 2007), which addressed the standard required to plead "scienter," or fraudulent intent, in a federal securities fraud claim under Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5.

The new decision, Higginbotham v. Baxter International, Inc., __ F.3d __, No. 06-1312, 2007 WL 2142298 (7th Cir. July 27, 2007), demonstrates that plaintiffs will face significant obstacles in overcoming the Tellabs standard,...

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