Perspective
Jul. 25, 2013
Courts take a closer look at confidential witnesses in securities fraud cases
Plaintiffs have increasingly sought to use statements by so-called "confidential witnesses" to show scienter in securities fraud actions. Sometimes, this practice is abused. By Glenn K. Vanzura and Steven N. Feldman
Prior to the enactment of the Private Securities Litigation Reform Act (PSLRA), shareholder plaintiffs asserting a claim under Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5 could aver the state of mind element of their claim - also known as scienter - "simply by saying that scienter existed." See In re GlenFed, Inc. Securities Litigation, 42 F.3d 1541, 1547 (9th Cir. 1994). In 1995, Con...
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