On April 5, 2024, the NAM filed an amicus brief urging the U.S. Supreme Court to enforce the robust pleading standards required by the Private Securities Litigation Reform Act 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 Supreme Court review is needed to resolve a circuit split on the pleading standards under the PSLRA. The panel’s decision will also 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.