Pleading And Proving Corporate Scienter After Dynex
July 15, 2008, 12:00 AM EDT
Law360, New York (July 15, 2008, 12:00 AM EDT) -- In Teamsters Local 445 Freight Division Pension Fund v. Dynex Capital Inc., 2008 WL 2521676 (2d Cir. June 26, 2008), the Second Circuit rejected the theory that a securities fraud plaintiff may prove the scienter of a corporation by reference to the collective knowledge of its employees.
Rather, for a corporation to be liable for securities fraud under Section 10(b) of the Securities Exchange Act of 1934, some corporate officer whose conduct is attributable to the company must have acted with the required state of mind....