By Cydney Posner

An article in the WSJ today discusses the new Supreme Court decision in Tellabs, a decision that supports a high pleading standard for securities fraud class actions. Under the 1995 Private Securities Litigation Reform Act, a securities fraud complaint must allege facts giving rise to a "strong inference" that defendants acted with an intent to deceive investors. According to the article, the decision defines the level of scienter required:  "To qualify as strong....we hold an inference of scienter must be more than merely plausible or reasonable," Justice Ginsburg wrote. "It must be cogent and at least as compelling as any opposing inference of nonfraudulent intent."

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