Courts Update from Skadden Securities Litigators for Insights
Spotlight: Supreme Court to Provide Guidance on Securities Litigation Standards
As we wrap up 2024, all eyes are on the U.S. Supreme Court as they delve into an important case involving the Private Securities Litigation Reform Act (PSLRA). In NVIDIA Corp. v. E. Ohman J:or Fonder AB, the Court is set to tackle the particularity requirement of the PSLRA, which aims to raise the bar for securities fraud cases.
The case centers on two key issues: first, whether plaintiffs need to provide detailed information from internal company documents when alleging scienter under the PSLRA, and second, if expert opinions can stand in place of specific factual allegations to meet the falsity requirement of the PSLRA.
Justices recently heard arguments in the NVIDIA case, expressing caution about establishing rigid rules. This hesitation follows similar sentiments raised in the Facebook, Inc. v. Amalgamated Bank case, where the Court ultimately decided against taking up the case after initially granting certiorari.
The NVIDIA case revolves around allegations that NVIDIA misled investors by downplaying the significance of GPU sales for cryptocurrency mining compared to gaming sales, resulting in a drop in stock price post-crypto market downturn. The plaintiffs pointed to internal NVIDIA reports as evidence, although they did not provide specific details from these reports. Instead, they relied on an expert firm, Prysm Group, to estimate the impact of crypto mining on NVIDIA’s revenues.
After a district court dismissal, a Ninth Circuit panel, in a split decision, approved the use of expert reports to support allegations of falsity in the securities fraud claim, setting the stage for the Supreme Court to weigh in on these key issues.
Stay tuned as the Supreme Court navigates the complex terrain of securities litigation and provides important insights into the application of the PSLRA’s particularity standard.
