Despite Supreme Court Reversal, Seventh Circuit Again Overturns Dismissal of Tellabs Securities Fraud Case

Blawgletter said last June that the decision in Tellabs, Inc. v. Makor Issues & Rights Ltd., 127 S. Ct. 2499 (2007):

turns on what Congress meant 12 years ago by "strong inference" of scienter in the Private Securities Litigation Reform Act.  The Court holds that the complaint as a whole must give "cogent" reasons for believing that the defendants meant to practice a fraud.  The nub of the decision:  From now on, lower courts have to infer whatever the complaint plausibly implies -- including innocent intentions.

Today, the Seventh Circuit revisited the very same Tellabs complaint and reached the very same conclusion it did before -- that the complaint states a viable claim for securities fraud.  As Judge Posner, after summarizing the allegations, concluded:

Because the alternative hypotheses--either a cascade of innocent mistakes or acts of subordinate employees, either or both resulting in a series of false statements--are far less likely than the hypothesis at the corporate level at which the statements were approved, the latter hypothesis must be considered cogent.

Makor Issues & Rights, Ltd. v. Tellabs Inc., No. 04-1687 (7th Cir. Jan. 17, 2008).  There you have it.

Contingent business law.

Comments

[the office goat]

the link above for the opinion didn't work, but I found it at:
http://www.ca7.uscourts.gov/tmp/A10VBDYM.pdf