New Ninth Circuit Decision Makes Alleging Scienter Easier for Plaintiffs

In the years following the passage of the Private Securities Litigation Reform Act of 1995 (PSLRA), plaintiffs have tried numerous approaches to satisfying the PSLRA’s stringent requirement to plead a “strong inference” of scienter. One oft-tried method is to assert that senior executives, often named as individual defendants alongside the company, must have been aware of facts underlying the alleged fraud because the information involved related to the business’s “core operations.” Courts have split over whether such “core operations” allegations satisfy the PSLRA, and, until earlier this week, the Ninth Circuit imposed one of the more stringent standards on plaintiffs. That is no longer the case.

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