Number: RS22634
Title: Securities Fraud: Tellabs, Inc. v. Makor Issues & Rights, Ltd.
Authors: Michael V. Seitzinger, American Law Division 
Abstract: The United States Supreme Court granted the petition for certiorari in the case Tellabs, Inc. v. Makor Issues & Rights, Ltd. The case was appealed from a decision by the Court of Appeals for the Seventh Circuit. It presented the question whether and to what extent a court must consider or weigh competing inferences in determining whether a complaint asserting a claim of securities fraud has alleged facts sufficient to establish a "strong inference" that the defendant acted with scienter, as required by the Private Securities Litigation Reform Act of 1995 (PSLRA). On June 21, 2007, the Supreme Court held that the pleading standard (what is in fact necessary to establish the strong inference of scienter) required by the PSLRA must be more than merely "plausible" or "reasonable." It must be "cogent," and at least as compelling as any opposing inference of nonfraudulent intent.
Pages: 5
Date: July 17, 2007