2nd Circuit's Dynex Decision: A Sensible Approach

Law360 (August 1, 2008, 12:00 AM EDT) -- On June 26, 2008, the Second Circuit issued a long-anticipated decision regarding the doctrine of "corporate scienter."

In Teamsters Local 445 Freight Division Pension Fund v. Dynex Capital Inc., No. 06-cv-2902, 2008 WL 2521676 (2d Cir. June 26, 2008) ("Dynex II"), the Second Circuit affirmed the doctrine of "corporate scienter" as a method for pleading securities fraud claims against a corporate defendant under the federal securities laws. In doing so, it underscored the continuing importance of traditional principles of agency in attaching securities fraud liability to a corporate defendant for the acts of its employees.

Under the Second Circuit's analysis in...

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