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Second Circuit Addresses Collective Scienter
The Second Circuit recently issued an important decision in Teamsters Local 445 Freight Div. Pension Fund v. Dynex Capital Inc., 531 F.3d 190 (2d Cir. 2008) (“Dynex“), which has significant implications for securities class action litigation and the continuing fallout from the crisis in the credit markets. The decision addressed the issue of collective scienter, or whether a corporation can commit securities fraud when none of its individual agents acted with fraudulent intent.
The court rejected the expansive doctrine of collective scienter urged by the plaintiff and held that the plaintiff had failed to satisfy the heightened pleading requirements of the Private Securities Litigation Reform Act (“Reform Act”). In particular, the court held that the inference of fraud urged by the plaintiff was weaker than the competing inference that the poor performance of certain asset-backed securities was the result of general market malaise. The opinion should prove significant in the many subprime mortgage and other lawsuits that have been filed in the wake of the ongoing credit crisis.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.