Quantifying Circuit Splits and the Dangers of Expert-Based Securities Fraud Complaints


Cornerstone Research hosted a virtual presentation by Stanford Law Professor and former SEC Commissioner Joseph Grundfest.

Professor Grundfest discussed questions presented by the petition for certiorari in In re NVIDIA Corporation Securities Litigation.

Quantifying the significance of circuit splits

Not all splits are created equal. Professor Grundfest will present a quantitative technique to measure the significance of circuit splits in some, but not all, cert petitions. The presentation will focus on federal securities litigation applications.

“Facts for sale” in securities fraud complaints

The cert petition pending in Nvidia relies on expert opinions to support plaintiff allegations under the Private Securities Litigation Reform Act. The complaint raises at least three questions for the Supreme Court to address:

  1. The PSLRA requires the pleading of “facts.” Is an expert report a fact or an opinion?
  2. Facts must be pleaded with “particularity.” If a complaint does not allow replication, is it adequately pleaded? What does “particularity” mean in this context?
  3. Tellabs requires that the inference of scienter be at least as credible as competing inferences. But how can courts determine whether an expert report’s inference is more credible than competing inferences, given the limited facts described in the Nvidia complaint?

Professor Grundfest examined these questions and shared his perspective on the matter’s likely resolution.


Joseph A. Grundfest

Former Commissioner, Securities and Exchange Commission;
W. A. Franke Professor of Law and Business, Emeritus,
Stanford Law School,
Senior Faculty, Rock Center for Corporate Governance,
Stanford University