Legal English: Fill In The Blanks & Complete The Court's Decision

The hint here is that a lead plaintiff, also known as a class representative, represents a class of plaintiffs in a lawsuit. Many securities fraud cases are brought as class actions.

A fraud allegation requires, among other things, that the plaintiff prove that the defendant made a materially false statement upon which the plaintiff relied resulting in damage to the plaintiff. Material means important - - so important that the plaintiff would not have made the same decision to give the defendant money if he had known the truth. If a salesman lies and says that a car is brand new, when it is actually 5 years old, that would be a materially false statement. If a salesman says that a car was repainted last week, when it was actually repainted two weeks ago, that is probably not a material falsehood.

Negligence is where a defendant fails to exercise the care one would expect from a similarly situated reasonable person. Negligence is a mistake. Fraud requires intentional or reckless conduct by the defendant.

Pursuant to Rule 12(b)(6) a defendant may move to dismiss a Complaint. If a Court dismisses the Complaint, plaintiffs will often have an opportunity to replead - - to submit another Complaint that cures the defects of the prior Complaint. Of the other choices, "quash" is closest but not the right term. Quash is where a court annuls a prior order, subpoena, injunction etc.

Affirmatively false misrepresentations are literally false statements made by the defendant. This is different from an omission, where a defendant fails to disclose a material fact.

Pleading requirements refer to the minimal standards that a Complaint must meet to allow a case to proceed. Generally speaking, pleading requirements in the US are fairly low, meaning that it is easy to start a case and also easy to raise initial defenses and counterclaims. The Private Securities Litigation Reform Act imposes some additional requirements on federal securities fraud complaints.

A "conclusory allegation" states a legal conclusion or factual inference without any factual support. There is actually a fair amount of debate on what exactly a "conclusory allegation" is, especially because the United States Supreme Court stated that conclusory allegations are insufficient. Generally speaking, lawsuits in federal court must be premised upon factual allegations. Allegations of fraud and allegations of securities fraud in particular require an even greater degree of specificity. Simply alleging that the defendant committed fraud, without providing an underlying factual basis, would be considered a conclusory allegation.

To disclose is to reveal. If a defendant fails to disclose an important fact of which he is aware, and by failing to disclose this fact he misleads the plaintiff, the defendant may be liable for fraud. Deceiving a plaintiff by failing to disclose an important fact is often called fraud by omission. For example, if a defendant says that his drug cured two people of a disease but fails to disclose that the drug killed hundreds of other people, he is probably guilty of fraud by omission.

When a court dismisses a complaint with prejudice, the plaintiff will not have a chance to replead - - to amend the Complaint and try again. If a Complaint is dismissed without prejudice, the plaintiff will be allowed to submit a Complaint with changes to meet the necessary pleading requirements.

Scienter means the defendant embraced an intention to deceive or to defraud. A defendant acted with scienter if he consciously misleads the plaintiff or recklessly disregards the truth.