Class Certified In Landmark Tellabs Securities Suit

Class Certified In Landmark Tellabs Securities Suit - 2/24/2009

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

SETTLEMENT NEWS:

Class Certified In Landmark Tellabs Securities Suit
Liz McKenzie

Securities Law 360. February 24, 2009
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EXCERPT: A judge has granted class certification in the securities class action filed against telecommunications supplier Tellabs Inc. that prompted the U.S. Supreme Court to heighten federal pleading standards for securities fraud lawsuits. Reigniting the precedent-setting securities suit filed by Makor Issues & Rights Ltd. in the U.S. District Court for the Northern District of Illinois, on Monday Judge Amy St. Eve certified a class of investors alleging that Tellabs deceived investors into purchasing company stock at artificially inflated prices. Investors who purchased common stock for the company between Dec. 11, 2000, and June 19, 2001, are eligible for the class. …The lawsuit has been the center of one the most significant decisions in securities law in recent years, acting as the test case for deciding the extent to which plaintiffs must prove scienter in order to satisfy the burden of proof required for securities fraud lawsuits to proceed in federal court. The case bounced from court to court and eventually landed before the U.S. Supreme Court, which issued a ruling in June 2007. In an 8-1 opinion, the Supreme Court ruled that “an inference of scienter must be more than merely plausible or reasonable — it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent." Authored by Justice Ruth Bader Ginsburg, the opinion not only states that the definition of “strong inference” must go beyond reasonable assumption, but it sets forth a set of principles addressing the application of the new legal standard. The verdict brought an end to a long-running debate over the interpretation of the Private Securities Litigation Reform Act of 1995, which established an extra pleading requirement that demanded that plaintiffs plead facts “giving rise to a strong inference” that the defendant either intentionally or recklessly committed the alleged fraud. …The case is Makor Issues & Rights Ltd. v. Tellabs Inc., case number 02-cv-4356, in the U.S. District Court for the Northern District of Illinois.

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