Motive and Opportunity Test Survives Congressional Death Knell in Private Securities Litigation Reform Act

Abstract

Congress enacted the Private Securities Litigation Reform Act in 1995, in an effort to stop frivolous securities fraud suits. Key to the effort was the imposition of a heightened pleading standard requiring plaintiffs to "state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind." There has been considerable controversy regarding whether Congress codified the "motive and opportunity" prong of the pleading standard historically used by the United States Court of Appeals for the Second Circuit. This Note argues that Congress intended to halt use of the motive and opportunity test in favor of a heightened and uniform pleading standard.