The Second Circuit and Eleventh Circuit Courts of Appeal affirmed dismissal of securities fraud claims because the plaintiffs did not adequately plead scienter under the standard imposed by the Private Securities Litigation Reform Act of 1995. Scienter is defined as which of the following? (a) The standard of reasonableness required of a prudent person in the management of his affairs (b) An untrue statement of a material fact (c) The intent to deceive, manipulate, or defraud (d) The failure to maintain due diligence during the issuance of new securities known as an IPO

Question

Mina Meyers

Business

8 March, 01:53

The Second Circuit and Eleventh Circuit Courts of Appeal affirmed dismissal of securities fraud claims because the plaintiffs did not adequately plead scienter under the standard imposed by the Private Securities Litigation Reform Act of 1995. Scienter is defined as which of the following? (a) The standard of reasonableness required of a prudent person in the management of his affairs (b) An untrue statement of a material fact (c) The intent to deceive, manipulate, or defraud (d) The failure to maintain due diligence during the issuance of new securities known as an IPO

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Duckling · Answer 1

Option C

Explanation:

In simple words, scienter relates to the psychological condition where one is conscious that his or her acts, words, etc., are false, dishonest or unlawful: sometimes seen as a presumption of guilt. Scienter can be defined as the legal term as well for malicious intentions or knowledge and understanding.

An offending entity then has prior information of an act or event's "wrongness" before actually perfroming it. For instance if an individual sells his friend an old car with car brakes that don't work but the seller doesn't know at all about the brake pad problem, then the seller doesn't have a scienter.