On October 20, 2023, the NAM filed an amicus brief urging the full 9th Circuit to enforce the robust pleading standards required by the Private Securities Litigation Reform Act (PSLRA) to assert a securities fraud claim. Public companies, including many NAM members, are often the targets of frivolous securities litigation. The PSLRA created a heightened pleading standard for bringing securities fraud suits. Nevertheless, a 9th Circuit panel allowed the plaintiffs in this case to rely on an expert’s post hoc analysis to support their securities fraud claim without alleging with particularity the contents of any internal report or data source that would have put the defendant’s executives on notice that their public statements about who was purchasing the company’s gaming processing units were false or misleading when made.
We argue in our amicus brief that the full 9th Circuit should rehear this case. The panel’s decision will create a playbook for securities plaintiffs to evade the PSLRA’s stringent pleading requirements by pointing to post-hoc, made-for-litigation expert opinions resting on unreliable assumptions and devoid of any basis in internal company data.
Unfortunately, on November 15, 2023, the 9th Circuit declined to rehear the case.