Daily Archives: June 5, 2004

Cards rake Stros

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The Redbirds teed off on Tim Redding, Mike Gallo, Chad Harville, and Ricky Stone as they rolled to a 10-4 victory at Busch Stadium on Saturday night.
Lance Berkman — whose Bondsian hitting over the past month has been largely wasted because the rest of the Stros’ hitters have slid into mediocrity — was the Stros’ lone bright spot as he rebounded from his hitless Friday night game to drive in all four Stros runs.
The season is only a third old and things can change over the course of a long season, but — at this point — the Stros don’t look particularly competitive against this Cardinal team. Since May 12, the Stros are a rather pathetic 8-14 and beyond Berkman, Clemens, and Oswalt, no player has performed at a consistently above-average level over those 22 games.
Roy O is the Stros’ last hope to salvage a game in St. Louis on Sunday afternoon. Jeff Suppan starts for the Cards.

Why did Tenet resign?

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The always entertaining Gordon Prather has a theory.

John Keegan’s perspective on Iraq

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John Keegan is England’s foremost military historian and, for many years, was the Senior Lecturer at the Royal Military Academy at Sandhurst. His book — The Second World War — is arguably the best single volume book on World War II.

Professor Keegan recently wrote this op-ed in the London Telegraph in which he places current events regarding the war in Iraq in historical perspective:

Then, Professor Keegan puts the current troubles in Iraq in the context of previous 20th Century wars:

History boys can explain easily – and convincingly – why some wars, as that against Germany in 1945, end in unopposed occupation of enemy territory and why others, as in Iraq in 1920 and 2004, do not. In the first case, the defeated nation has exhausted itself in the struggle and is dependent on the victor both for necessities and for protection against further disaster – social revolution or aggression by another enemy. In the second case, the war has not done much harm but has broken the power of the state and encouraged the dispossessed and the irresponsible to grab what they can before order is fully restored.

What monopolises the headlines and prime time television at the moment is news from Iraq on the activity of small, localised minorities struggling to entrench themselves before full peace is imposed and an effective state structure is restored.

While noting those troubles, Professor Keegan closes by focusing on the bottom line:

It is a regrettable but not wholly to be unexpected outcome of a campaign to overthrow a dangerous Third World dictator. If those who show themselves so eager to denounce the American President and the British Prime Minister feel strongly enough on the issue, please will they explain their reasons for wishing that Saddam Hussein should still be in power in Baghdad.

Another decision on group fraud allegations in a securities fraud case

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In this earlier post, the recent Fifth Circuit decision in (Southland Sec. Corp. v. INSpire Ins. Solutions, Inc., No. 02-1055 (5th Cir. March 31, 2004)) was noted for holding that the group pleading doctrine for alleging a company’s public statements (such as press releases or regulatory filing statements) as a basis for fraud against corporate officers does not withstand the Private Securities Litigation Reform Act of 1995 (PSLRA)’s specificity requirements.
However, other federal courts have not been as demanding as the Fifth Circuit in requiring specific allegations of fraud against defendants. In the recent decision of In re NUI Sec. Litig., 2004 WL 895846 (D.N.J. April 23, 2004, the court found that the plaintiffs had adequately pled a sufficiently strong inference of scienter to sustain Rule 10b-5 claims against the corporate defendant (NUI) based on allegations that a stock-for-stock acquisition of another company gave NUI a motive to inflate the price of its stock and that NUI’s associate general counsel (who is not a defendant in the case) knew of NUI’s fraudulent conduct. As to NUI’s CEO and CFO (both of whom are defendants in the case), the court concluded that the plaintiffs’ allegations regarding their motive to commit fraud and knowledge of the fraudulent conduct were insufficient to sustain the Rule 10b-5 claims against them.
But wait. The CEO and CFO are not off the hook. Inasmuch as they controlled NUI and the court found that a Rule 10b-5 claim was adequately pled against NUI, the Section 20(a) claims against the CEO and CFO based on control person liability can continue. Ouch!
This decision — as with last year’s decision in In re Interpublic Securities Litigation, 2003 WL 21250682, (S.D.N.Y. May 29, 2003) — are eroding the PSLRA’s requirement that plaintiffs specifically plead scienter as to each defendant in the lawsuit. Normally, courts reject “collective scienter” theories — that is, in determining whether a corporate defendant acted with scienter, courts examine the specific state of mind of the individual corporate official who made or approved the corporate statement rather than the collective knowledge of all the corporation’s officers and employees. However, in the In re NUI Sec. Litig. decision, the court clearly imputed the knowledge of the associate general counsel to the corporate defendant for scienter purposes despite the fact that the associate general counsel was not alleged to have made or issued the false statements.
This is a trend worth keeping an eye on. Hat tip to the 10b-5 Daily for the link to the NUI decision.