4th Circ. Deals Blow To Securities Fraud Plaintiffs
By Colby Smith, Jonathan Tuttle, Ada Fernandez Johnson and Eileen Castilla Zelek (December 13, 2017, 11:32 AM EST) -- The Fourth Circuit recently dealt a significant blow to securities fraud plaintiffs by firmly rejecting their attempt to bleed together the material misrepresentation and scienter requirements under the Private Securities Litigation Reform Act. In Maguire Financial LP v. PowerSecure International Inc., the Fourth Circuit held that an inference that a defendant knew that he made a false statement that was material, which would be sufficient to meet the plaintiffs' burden to plead a "material misrepresentation," failed to also satisfy the requisite "strong inference" of scienter, as scienter must be supported by concrete facts about the defendant's intent, not merely other inferences. By cabining material misrepresentation and scienter within their respective domains, the Fourth Circuit highlighted the onerous bar securities fraud plaintiffs must meet for their claims to survive dismissal....
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