Cleary Gottlieb Discusses Why Second Circuit Should Abandon “Core Operations” Doctrine

In the Private Securities Litigation Reform Act of 1995, Congress imposed heightened pleading standards on securities fraud claims in order to discourage the filing of unmeritorious litigation.[1]  Key among these standards are the dual requirements that a complaint “state with particularity”:  (i) “all facts” on which allegations based on information and belief are formed; and (ii) facts giving rise to a “strong inference that the defendant acted with the required state of mind.”[2]  Notwithstanding these heightened pleading standards, a small number of courts within the Second Circuit have continued to apply pre-PSLRA case law finding scienter to be … Read more