Limits on Litigation and the Bailout

We have a nice post below from Scott James, one of the Blog student editors.  He discusses In re Ceridian, a case from the 8th Circuit that upholds the dismissal of a securities fraud case despite the company having undertaken five restatements over a fourteen or so month period.  The case applied the elevated standards for pleading scienter that were included in the PSLRA.  Since a motion to dismiss stops discovery, the high pleading standards shield wrongdoing in some cases since shareholders cannot examine what actually happened but are limited in their information to public sources.  These pleading standards, along with the new limits imposed by the Supreme Court in Stoneridge, limit the ability of shareholders to reach culpable defendants.  This will become increasingly apparent as the litigation relating the the subprime crisis winds its way through the courts.  Assuming regime change in November, it may well be time for Congress to revisit these restrictions and consider overturning them.