In Nvidia and Meta cases, Supreme Court will review shareholder class action dismissal rules | Reuters

In the Nvidia case, the Supreme Court will decide whether shareholders can establish a company’s fraudulent intent by pointing to internal documents they have not actually seen and whether investors can rely on their own hired experts to prove the company’s representations were false. The 1995 federal law governing shareholder class actions, the Private Securities Litigation Reform Act, requires plaintiffs to show both fraudulent intent, or scienter, and falsity in order to survive defense motions to dismiss their cases.

According to Nvidia’s Supreme Court counsel from Hogan Lovells, only the 1st and 9th Circuits allow plaintiffs to “speculate” about the content of internal corporate documents in order to establish a defendant’s intent to deceive investors. And only the 9th Circuit, they said, permits shareholders to use their own hired expert, “rather than particularized facts,” to show the company fed false information to investors.

Source: In Nvidia and Meta cases, Supreme Court will review shareholder class action dismissal rules | Reuters