This Note takes the position that emerging collective scienter theory may bar courts from attributing liability for securities fraud under SEC Rule 10b-5 directly to a corporation. Recent developments under the Private Securities Litigation Reform Act (PSLRA) seek to strengthen pleading standards in securities litigation by requiring that a plaintiff plead a strong inference of scienter on the part of a corporate defendant to survive a motion for dismissal. Federal district and appellate court decisions demonstrate the recent increasing support for collective scienter, a theory which allows a plaintiff to plead that one employee made a material misstatement while another had the requisite scienter. This Note examines representative cases applying the weak and strong forms of collective scienter and finds that each case misinterpreted the case law upon which it relied. Where case law fails to demonstrate the theory’s viability, comparative analogies to established legal concepts further call into question the feasibility of collective scienter. This Note contends, by analogy to the group pleading doctrine, that the strong version of collective scienter fails to comport with the PSLRA’s strong inference standard. Further, this Note finds that weak collective scienter’s expansion of standard corporate liability—normally attributed by common law agency principles—is unwarranted and unfeasible as a policy matter. Finally, this Note recommends a return to the application of respondeat superior in determining corporate liability.
News & Events
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2013 Minnesota Law Review Symposium
The Future of Organized Labor: Labor Law in the 21st Century Friday, October 25, 2013 At the turn of the century, 28 percent of American workers were unionized. Today, only 8 percent of American workers belong to unions, and the decline is likely to continue. The 2013 Symposium will allow [...]
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Volume 97 Lead Piece Profiled in New York Times
The Volume 97 Lead Piece, a study of how the Supreme Court treats business interests by distinguished legal scholars Lee Epstein, William M. Landes, and Richard A. Posner, was profiled in the May 5, 2013 edition of the New York Times. The story, titled Corporations Find a Friend in the Supreme Court, [...]
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Volume 98 Spring Submissions Closed
The Minnesota Law Review has closed the spring submissions period for Volume 98. Submissions for Volume 98 will reopen on Thursday, August 1. Please see the submissions page for more details.
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Volume 98 Submissions Will Open Feb. 15
The Minnesota Law Review will begin accepting submissions for Volume 98 on Friday, February 15, 2013. Please see this page for more details.
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Minnesota Law Review Announces Volume 98 Editorial Board
The Minnesota Law Review is pleased to announce its Volume 98 editorial board, headed by Editor in Chief Jake Vandelist.
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