Securities Law | Expert Legal Commentary
September 19, 2008
Teamsters Local 445 v. Dynex: “Corporate Scienter” Possible Without Naming Names
Teamsters Local 445 Freight Div. Pension Fund v. Dynex Capital Inc.
By
Joel B. Ginsberg
In its highly anticipated opinion in Teamsters Local 445 Freight Div. Pension Fund v. Dynex Capital Inc., 531 F.3d 190 (2nd Cir. 2008), the Second Circuit affirmed that a securities fraud plaintiff can plead corporate scienter without specifically identifying the culpable corporate officer or director whose individual scienter could be imputed to the corporation. The plaintiff need only plead facts sufficient to establish a “strong inference” that someone in the corporation whose acts could be imputed to the corporation acted with the requisite scienter. However, the court warns that the standard for making such a pleading is very high, requiring heightened specificity.
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