“Don’t Blame Me, Blame the Financial Crisis”: A Survey of Dismissal Rulings in 10b-5 Suits for Subprime Securities Losses

September 28, 2011

     This Note surveys thirty-four district court decisions on motions to dismiss in actions brought under SEC Rule 10b-5 for losses suffered during the recent financial crisis.  This Note focuses on issues of scienter and loss causation, the elements of a 10b-5 claim most likely to be affected by a market-wide downturn.  In the opinions surveyed, successfully pleading scienter proved the biggest hurdle for plaintiffs in surviving a motion to dismiss, and this Note proceeds to analyze the factors that influenced whether a district court found scienter to be adequately pleaded.  This Note also examines efforts by both plaintiffs and defendants to use the financial crisis of 2007-08 to support their arguments for or against dismissal, again with particular focus on scienter and loss causation.