The Supreme Court rules in Tellabs that all inferences must be considered

On June 21, 2007, the Supreme Court issued its opinion in the first of two securities fraud cases pending before the Court: Tellabs Inc v Makor Issues & Rights Ltd. In Tellabs, the Court reviewed a prior decision from the Seventh Circuit Court of Appeals, which held that a district court should...

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Veröffentlicht in:Insights (Clifton, N.J.) N.J.), 2007-08, Vol.21 (8), p.32
Hauptverfasser: Hurd, Susan E, Jordak, John A, Wilcove, Kelly C
Format: Artikel
Sprache:eng
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Zusammenfassung:On June 21, 2007, the Supreme Court issued its opinion in the first of two securities fraud cases pending before the Court: Tellabs Inc v Makor Issues & Rights Ltd. In Tellabs, the Court reviewed a prior decision from the Seventh Circuit Court of Appeals, which held that a district court should not consider inferences favorable to a defendant in ruling on a motion to dismiss. The Supreme Court reversed the Seventh Circuit, holding that a consideration of competing inferences was not only permissible, but indeed was required to give full effect to the heightened pleading requirements of the Private Securities Litigation Reform Act (Reform Act). The Tellabs decision makes clear that, on a motion to dismiss in a securities fraud case, a court must consider all plausible nonculpable explanations for the defendant's conduct, as well as inferences favoring the plaintiff.
ISSN:0894-3524