On June 7th, the Court of Appeals for the First Circuit affirmed the dismissal of plaintiff's securities fraud lawsuit. Although plaintiff credibly pleaded that defendants made material misstatements concerning their backlog of orders, plaintiff failed to adequately plead scienter. Defendants' statements were extravagant and possibly negligent. But neither negligence nor puffing is enough to establish scienter. Automotive Industries Pension Trust Fund v. Textron Inc.
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Extravagant statements are insufficient to establish scienter
- Winston & Strawn LLP
- June 11 2012
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