On June 21, 2005, WLF scored a major victory when the U.S. Supreme Court overturned a court of appeals decision that would have allowed plaintiffs’ lawyers to continue filing abusive federal securities complaints against companies without alleging specific facts showing the requisite state of mind as Congress intended under the Private Securities Litigation Reform Act of 1995 (PSLRA). In an 8-1 opinion, the Court ruled that plaintiffs’ attorneys must allege specific facts of wrongdoing by executives that were “cogent and at least as compelling” as explanations by company officials that their statements did not mislead or defraud investors. No longer will plaintiffs’ attorneys be allowed to make only general allegations of wrongdoing, which have unfairly forced
companies to settle such suits rather than engage in expensive litigation.