- Confidential Witness Statements Aren't Enough to Support Securities Fraud Claim.
On November 15th, the Third Circuit affirmed the dismissal of a putative class action securities fraud lawsuit for failure to adequately plead scienter. In doing so, the Court reiterated the requirements plaintiffs must meet when relying on confidential witness statements to support their securities fraud claims. It concluded that where, as here, the confidential statements relied upon by plaintiffs fail to reflect the source's basis of knowledge, reliability, and corroborative nature, the statements must be discounted steeply and do not support plaintiffs' scienter allegations. Rahman v. Kid Brands, Inc.
- Supreme Court to Hear Fraud-on-the Market Case.
On November 15th, the Supreme Court granted certiorari in Halliburton Co. v. Erica P. John Fund, Inc., 13-317, in order to consider the modification of the fraud-on-the-market presumption of reliance in class action securities fraud cases. It will also consider whether a defendant in such a case may rebut the presumption and prevent class certification by introducing evidence that the alleged misrepresentations did not distort the market price of its stock. See Questions Presented. See also, decision below.