The Falsity-Scienter Inference

Wendy Gerwick Couture

University of Idaho College of Law


Securities Regulation Law Journal, Vol. 40, p. 303, 2012

This essay argues that, under certain circumstances in securities fraud cases, a statement’s well-pleaded falsity gives rise to a strong inference that the speaker acted with scienter. In particular, this essay contends that the well-pleaded falsity of a statement is sufficient to create a strong inference of scienter when (1) the truth is necessarily within the speaker’s core knowledge; and (2) the statement is sufficiently false to have necessarily caught the speaker’s attention. This falsity-scienter inference potentially applies in a variety of securities fraud contexts, including falsified CEO résumés, objectively unreasonable analyst opinions, and cooked books. In addition, the falsity-scienter inference supports adoption of the controversial “core operations inference” and provides guidance on the proper scope of this narrower inference.

Number of Pages in PDF File: 11

Keywords: Securities Regulation, Securities Litigation, Scienter, Falsity, Pleading

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Date posted: September 3, 2012  

Suggested Citation

Couture, Wendy Gerwick, The Falsity-Scienter Inference (2012). Securities Regulation Law Journal, Vol. 40, p. 303, 2012. Available at SSRN: https://ssrn.com/abstract=2138225

Contact Information

Wendy Gerwick Couture (Contact Author)
University of Idaho College of Law ( email )
PO Box 83720
Boise, ID 83720-0051
United States
208-364-4547 (Phone)
HOME PAGE: http://www.uidaho.edu/law/people/faculty/wgcouture
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