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Long-Term Impact Of Dynex On Scienter

Law360 (August 22, 2008, 12:00 AM EDT) -- On June 26, 2008, the 2nd Circuit decided Teamsters Local 445 Freight Division Pension Fund v. Dynex Capital Inc., 531 F.3d 190 (2d Cir. 2008). The decision is significant in two ways.

First, along with the 7th Circuit’s recent decision in Tellabs following remand from the Supreme Court, it rejects the “collective scienter” concept.

In other words, it rejects the idea that a plaintiff can prove corporate scienter by aggregating the “collective” states of mind of several of the corporation’s employees, rather than by proving that...
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